Inherently, financial valuations are forward looking. Unfortunately, the only hard data we have is historic, interest rates included. Theoretically, the MMA rate that I use is intended to represent the MMA rate that will be earned over then next 20 years.
So how did I come up with the 4.61% that is currently being used? I use the 20-year U.S. Treasury rate to calibrate the MMA rate, which ironically was exactly 4.61% on August 1, 2008.
I don't really expect this will stop the questions and comments about my MMA Rate, but I now I have a post that I can point to to help explain what is happening.
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