Answer: 3%.

The opportunity cost of not investing in the US Treasury bill is the nominal risk-free interest rate, which is the sum of the real risk-free rate and the inflation premium. Here, the real risk-free rate is 1%, and the inflation premium is 2%, resulting in a nominal risk-free rate of 3%. This represents the investor's opportunity cost, as it reflects the return they forego by not investing in the T-bill. The nominal risk-free rate is a key concept in quantitative methods, where interest rates are interpreted as required rates of return, discount rates, or opportunity costs.

Author: LeetQuiz Editorial Team