Suppose the actual inflation rate is 2% over the next year. Once the loan has been repaid, what is the nominal rate of interest and real rate of interest?

Q: (Inflation and interest rates​) What would you expect the nominal rate of interest to be if the real…

A: The formula to calculate nominal rate of interest is: (1 + Nominal rate of return) = (1 + Real rate…

Q: For the average saver, the real rate of interest on his or her savings is %. (Round your response to…

A: As per company policy it is only possible to solve one question at a time. so solving the first one.…

Q: If Treasury bills are currently paying 3.05 percent and the inflation rate is 1.89 percent, what is…

A: Approximate Fischer relation is: Nominal Rate = Real rate + Inflation So, Real rate = Nominal Rate…

Q: ​(Inflation and interest rates​) What would you expect the nominal rate of interest to be if the…

A: The nominal rate of interest is the rate that includes the inflation effect in the interest rate.…

Q: If there is a deflation rate of 2% and your account is earning a nominal interest rate of 1.75%,…

A: Deflation rate (d) = 2% Nominal interest rate (r) = 1.75%

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: (Inflation and interest rates) Assume the expected inflation rate is 4.1 percent. If the current…

A: A financial product's declared or marketed interest rate, such as that on a loan, bond, or savings…

Q: 6. The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on car…

A: real rate = nominal rate - inflation

Q: Please answer quickly and correctly Suppose that the general inflation rate is 3% and the real…

A: As opposed to real interest rates and effective interest rates, nominal interest rates are the…

Q: What real interest rate is offered by a savings account with a 13% nominal rate during a period of…

A: Nominal Interest Rate = 13% = 0.13Inflation Rate = 6% = 0.06

Q: What would you expect the nominal rate of interest to be if the real rate is 5 percent and the…

A: We require to compute the nominal rate of interest in this question.

Q: Suppose the interest rate on a 3-year Treasury Note is 1.25%, and 5-year Notes are yielding a 3.50%.…

A: Answer: A 2 year treasuries will be yielding 3 years from now should be 6.97%

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: last year, i took out a loan with an interest rate of 4.24% when inflation was only 1.9%. now…

A: The real interest rate is the inflation adjusted interest rate which is reflecting the increase in…

Q: The nominal interest rate on a loan is 12.5% and inflation is 3%. What is the real interest rate?

A: Information Provided: Nominal Rate = 12.5% Inflation = 3%

Q: a. If the interest rate is 5.0% per year, approximately how long will it take for your money to…

A: The Rule of 72:The Rule of 72 is a simple, effective rule that is frequently used to determine how…

Q: If you borrow $100 at 5% interest rate (nominal) and inflation rate is 3%, what is the most accurate…

A: nominal interest rate = nr = 5% Inflation rate = ir = 3%

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: 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 inflation during the last 12 months was 2% and the interest rate during that periodwas 5%, what…

A: Real Rate: It is the rate which the investor would receive by investing the money. The real rate of…

Q: Which of the following statements regarding the interest rates is correct? I As a result of…

A: The correct option is c) I and II only.

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: The rate of inflation is 4.1%. What nominal rate of return will you need in order to achieve a 5.0%…

A: Nominal Rate of Return = {(1 + Real Interest Rate)} x {(1 + Inflation Rate)} - 1

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: Construct a spreadsheet to convert a nominal interest rate compounded m times per year i(m) and…

A: The nominal rate when compounded per period gives the effective rate of interest. The effective rate…

Q: interest rate on a 3-year treasury note is 2.75%, and 6-year notes are yielding 3.50%. Based on the…

A: According to the expectation theory short term interest would be on the basis of long term interest…

Q: The annual inflation rate is expected to be 4.78% and the nominal (annual) interest rate is 5.75%.…

A: Inflation rate (π) =4.78% Nominal rate of interest (i)=5.75%. Using Fischer equation, real interest…

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: 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: Assume that the real interest rate is 2% per year, the default risk premium is 3%, the liquidity…

A: Given: Real interest rate = 2% Default risk premium = 3% Liquidity risk premium = 1%

Q: The (blank) interest rate is referred to as APR and the (blank) interest rate is the true rate…

A: Effective rate ( EAR) FORMULA: EAR =1+APRMM-1M = frequency of compounding

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on car…

A: Answer a) Computation of Expected real interest rate and Actual real interest rate before increase…

Q: The expected inflation rate is 26.5%. If the current real rate of interest is 21%, what should the…

A: Nominal rate of interest is calculated using following equation Nominal interest rate = [(1+Real…

Q: You will receive cash flows of $23.42 next year from a perpetuity. The perpetuity is indexed to…

A: Present value in case of perpetuity The quantity of the regular cash flows is simply divided by the…

Q: Suppose that the general inflation rate is 5% and the real interest rate is 3%. Find the market…

A: Inflation can be defined as the increase in general price levels in the market. Inflation reduces…

Q: If we require a 5% real return and we expect inflation to be 2%, what is the nominal rate of…

A: Nominal rate of interest =Real return + inflation.

Q: the nominal interest rate per year is 12% and the inflation rate is 8%, what is the real rate of…

A:

Q: Calculating Real Rates of Return IfTreasury bills are currently paying 4.7 percent and the inflation…

A: Real rate of return refers to the return after the adjustment of the inflation rate.

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…