If the current inflation rate is 2​%, then the nominal rate necessary for you to earn an 8.5​% real interest rate on your investment is closest​ to:   A. 14.9​%   B. 10.7​%   C. 17.1​%   D. 12.8​%

Q: For a nominal interest of 11% and inflation of 5%, according to the Fisher Effect, what would be the…

A: Nominal Interest rate is 11% Inflation rate is 5%   To Find: Approximate real rate of return

Q: If the rate of inflation is 5.9%​, what nominal interest rate is necessary for you to earn a 2.6%…

A: Nominal interest rate is the simple interest rate that you pay to lender for use of money. Nominal…

Q: what should the nominal rate of interest​ be?

A: Nominal interest rate (NIR) refers to a interest rate which an investor is expect from his…

Q: If the rate of inflation is 4.6%, what nominal interest rate is necessary for you to earn a 2.2%…

A: The nominal interest rate is an interest rate before considering the inflation rate. The formula for…

Q: If investors are to earn a 3.4% real interest rate, what nominal interest rate must they earn if the…

A: Real Interest rate = rr = 3.4%Formula :Nominal Interest rate = ((1 + Real Interest rate) * (1 +…

Q: You want to earn a real rate of return of 6.50% at a time when the inflation rate is 3.25%. What is…

A: Interest refers to the amount charged by the lender on the lent amount. The borrower of the loan is…

Q: If investors are to earn a 3.5% real interest rate, what nominal interest rate must they earn if the…

A: nominal interest rate =(1+real interest rate)(1+inflation)-1

Q: suppose the real intrest rate is 2.5% and the inflation rate is 7% . what is the nominal intrest…

A: Solution:Nominal interest rate means rate of return after adjustment of inflation rate in the real…

Q: If investors are to earn a 2.9% real interest rate, what nominal intere inflation rate is: Note: Do…

A: Nominal interest rate is the interest rate that includes inflation also and real interest rate…

Q: What would you expect the nominal rate of interest to be if the real rate is 5.3 percent and the…

A: Nominal Interest Rate: It refers to the rate of interest that does take into consideration the…

Q: If the rate of inflation is 6.5%, what nominal interest rate is necessary for you to earn 3.3% real…

A: Given information: Rate of inflation is 6.5% Real interest rate on investment is 3.3%

Q: If the rate of inflation is 4.8%, what nominal interest rate is necessary for you to earn a 2.2%…

A: Inflation rate = 4.8% Real rate = 2.2%

Q: lation and interest rates What would you expect the nominal rate of interest to be if the real rate…

A: Nominal interest rate is rate which includes both real return and inflation and generally more than…

Q: If inflation is anticipated to be 6 percent during the next year, while the real rate of interest…

A: The nominal return is the sum of the inflation rate and the real rate that we can calculate using…

Q: What is the (exact) nominal return on an investment that earns a real return of 14.7% while…

A: Solution:- Nominal rate of return means the rate of return inclusive the effect of inflation.

Q: Assume that the interest rate offered on a CD was 4.8% when the rate of inflation was 2.3%. If the…

A: In this question nominal rate of interest is given so we need to find out the real interest rate.…

Q: The expected inflation rate is 2.1%. What nominal interest rate is necessary to earn a real return…

A: The real rate of return is the net percentage of interest earned after adjusting the inflation rate.…

Q: Inflation and Nominal Returns Suppose the real rate is 1.8 percent and the inflation rate is 3.7…

A: Risk-free rate: This can be described as the rate of return of the asset which has zero risks.…

Q: If the inflation rate is 6%, cost of money is 10%, what interest rate will take care of inflation…

A: Nominal Interest Rate: This percentage increase in the amount of money you pay the lender in…

Q: What would you expect the nominal rate of interest to be if the real rate is 4.2 percent and the…

A: In the given case, we have provided the real rate of interest and the inflation rate.So, to…

Q: If the market interest rate is 16% and the inflation rate is 10%, determine the real interest rate.…

A: Market interest rate = 0.16 Inflation rate = 0.10

Q: Nominal rate of return is 10.80%. Inflation rate is 6.95%. What is the real rate of return as per…

A: Fisher equation is a equation that on the basis of effect of inflation, it finds out the…

Q: According to the fisher equation, if the real rate of interest is 2.5% and the nominal rate of…

A: The inflation rate refers to the rate at which the value of the currency decreases over time and the…

Q: Nominal rate of return is 10.80%. Inflation rate is 6.95%. What is the real rate of return as per…

A: Fisher equation: real rate of return=1+nominal rate1+inflation-1

Q: If the expected inflation rate is 3.45%, the realized real rate of return is 3.80%, and the actual…

A: Expected Inflation Rate is 3.45% Realized Real Rate of Return is 3.80% Actual Inflation Rate is…

Q: If the rate of inflation is six decimal places.) The nominal interest ra

A: We need to use nominal interest rate formulanominal rate of return = [(1 + Real rate)*( 1 +…

Q: If investors are to earn a 3.7% real interest rate, what nominal interest rate must they earn if the…

A: We need to use nominal rate equation below to calculate nominal rate.Nominal Interest rate = (1 +…

Q: What is the real interest rate given a nominal rate of 8.7​% and an inflation rate of 1.5​%? A.…

A: The real interest rate is an inflation-adjusted interest rate. It will reflect the real return after…

Q: 2. If the current inflation rate is 3.6% and you have an investment opportunity that pays 10.9%,…

A: Inflation rate = 0.036 Nominal interest rate = 0.109 Real rate of interest = ?   Real rate of…

Q: What would you expect the nominal rate of interest to be if the real rate is 4.2% and the expected…

A: Solution:- Nominal rate of interest means rate of interest after the effect of inflation in real…

Q: If your real rate of return is 2% and the inflation rate is 3%, what is the nominal rate of return?

A: Real rate of return = 2% Inflation rate = 3%

Q: ou purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your…

A: Real rate of return is the net rate of return after deduction of inflation from the nominal rate of…

Q: If investors are to earn a 2.4% real interest rate, what nominal interest rate must they earn if the…

A: The Fisher equation is an economic principle that describes the relationship between nominal…

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.