I have a time series of the three month interbank rate each month and I suppose that the rate is has yearly frequency.
I need these interbank rates to be on a monthly basis because I want to us these rate as a proxy for the risk- free rate, so I can subtract the rates from my monthly return to get the excess rate.
Let's consider an example:
by assuming the monthly return of stock x in April is 6%. The interbank rate at the end of April is 3% annually. Can I simply subtract o.25%(3/12) from 6% resulting in 5.75% of excess return.
Any help would be much appreciated.