2. If the current inflation rate is 3.6% and you have an investment opportunity that pays 10.9%, then what is the real rate of interest on your investment? Please use both exact formula and approximate formula.

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A:

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Q: am. 162.

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.