This morning, you observe in the markets that the nominal interest rate is 6%, which includes inflation expectations of 4%.  If inflation expectations go up by 1% and nominal interest rates go up by 1.5%, what is the resulting real interest rate

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
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This morning, you observe in the markets that the nominal interest rate is 6%, which includes inflation expectations of 4%.  If inflation expectations go up by 1% and nominal interest rates go up by 1.5%, what is the resulting real interest rate?

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