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If the expected real interest rate of 5% and expected inflation rate of 3%, then the nominal interest rate in year t is approximately
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- If the interest rate on a one-year loan is 5%5% and the expected inflation rate is −2%−2% for the same period, what is the expected real interest rate on the loan?If the bank posts a nominal interest rate of 7 per cent per year and the inflation rate is 5 per cent per year, then the real interest rate would be __%.Suppose Emma owns an investment portfolio. Last year, she earned a 3.65% portfolio return. During the same year, the real interest rate was 2.27%. In this case, the inflation rate is closest to A. 0.62%. B. 1.35%. C. 1.61%. D. 2.95%.
- If the real interest rate is 6% and the inflation rate is 12%, then the nominal interest rate equals a) 2%. b) 0.5%. c) 6%. d) 36%.Suppose you purchase a $1,500 TIPS on January 1, 2020. The bond carries a fixed coupon rate of 5.5 percent. Over the first two years, semiannual inflation is 1.5 percent, 1.5 percent, 4 percent, and 3 percent, respectively. What is the principal at the end of month 6?Suppose you take out a loan at your local bank. The bank expects to earn an annual real interest rate equal to 33%. Assuming that the annualized expected rate of inflation over the life of the loan is 11%, determine the nominal interest rate that the bank will charge you.
- Suppose that the investment function is I = 3,500 − 100r, where r is the real interest rate (in percent). If the nominal interest rate is 12 percent and the inflation rate is 4 percent, then total investment will be:If the expected inflation rate in 2010 was 10% and the real interest rate was 5% higher than the equilibrium interest rate, then the actual inflation rate was _____If banks expect that the rate of inflation in the coming year will be 4.95% and they want a real return of 8.5% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is ____%
- Suppose you have $400 and the inflation rate is 4 percent. In order to earn a real return of $20 on your investment, the nominal interest rate must be OA. 1 percent. B. 5 percent. C. 9 percent. D. 12 percent. ...In order to make up for the future loss in purchasing power. the rate at which you earn interest must be sufficiently higher than the anticipated inflation rate. True or false?Suppose you want to earn a real interest rate of 5%. For inflation rates of 0.0, 1.0, 2.0, …, 9.0, 10.0, 15.0, 20.0, and 50.0%, determine the combined rate of interest you must earn.