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Q: What would you expect the nominal rate of interest to be if the real is 4 percent and the expected inflation rate is 7 percent?
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What happens if inflation rises by just 1 percent?

The dollar in your pocket is worth .99 of a dollar. also nominal interest=real interest+inflation so nominal interest goes up by 1%


The annual nominal rate of interest on a bank certificate of deposit is 12 percent what would be the effect of an inflation rate of 13 percent?

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The real risk-free rate of interest is 4 percent Inflation is expected to be 2 percent this year and 4 percent during the next 2 years Assume that the maturity risk premium is zero What is the yield?

The answers are 7%, 7.33%.


How much will 180000 dollars be in 20 years with 9 percent interest and 4 percent inflation rate?

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What is the nominal rate of interest per annum compounded monthly equvalent to effective interest rate of 12.60 percent per annum?

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