What would you expect the nominal rate of interest to be if the real rate is 5 percent and the expected inflation rate is 3 percent?

Q: What effect do you think this inflation adjusted rate has on the price of an I-bond in comparison…

A: I-Bonds also known as inflation link saving bonds are the bonds with minimal risk category…

Q: ​(Related to Checkpoint​ 9.6)   ​(Inflation and interest rates​) What would you expect the nominal…

A: Nominal interest rate refers to the interest rate before taking inflation into account. The equation…

Q: Treasury bills are currently paying 6 percent and the inflation rate is 3.10 percent. What is the…

A: Nominal interest rate = 6% Inflation rate = 3.10%

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: Can you show the steps specifically on how you got the quarterly interest rate. Instead of just the…

A: The use of rate function in excel is a prominent way to estimate accurate interest rate of a loan…

Q: The future value of an ordinary annuity for any given interest rate and number of periods is always…

A: Annuity refers to a fixed and constant sum of cash flow that occurs in each period.For example…

Q: If Treasury bills are currently paying 5.75 percent and the inflation rate is 2.8 percent, what is…

A: Data given: Treasury bill rate = 6% Inflation rate= 2.3%   Required: i) Approximate real rate ii)…

Q: (Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of…

A: The nominal interest rate is usually greater than the inflation rate by the amount of the expected…

Q: Question 2. (5 marks) In general, what is the formula for the present value of an annuity of C…

A: Answer 1 No, it is not practically possible to determine theprecise debt-equity ratio which…

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

A: To calculate the nominal rate of interest we will use the below formulaNominal rate of return =…

Q: hOW DO YOU CALCULATE MARR in real terms? (Adjusted for inflation)

A: Minimum Acceptable Rate of Return (MARR) is made to ascertain the economic attractiveness of the…

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: (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: (Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of…

A: Nominal rate is the rate which has been stated in the loan documents or the financing arrangement…

Q: (Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of…

A: Nominal rate is the rate which has been stated in the loan documents or the financing arrangement…

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: Which of the following is an instrument of monetary policy? The interest rate on three-month…

A: Monetary policy refers to the credit control measures adopted by the central bank of a country.

Q: Interest rate that include an inflation premium are referred to as

A: In the world of finance you will often come across the term nominal rate and real rate.

Q: If the nominal interest rate is 8% and the inflation rate is 6%, what is the real interest rate? (Do…

A: The real interest rate is the rate of interest an investor expects to receive after allowing for…

Q: Using the following information, determine the real rate of interest: Rate % inflation 0.53 T-bill…

A: Real rate of interest is calculated based on the one year nominal rate of interest and inflation…

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: The nominal rate of interest would be %.

A: We can define real interest rate as those interest rates which have been adjusted for the inflation…

Q: a. What is the approximate real rate of interest? (Enter your answer as a percent rounded to 2…

A: The real interest rate is examining the actual value of money. After accounting for fluctuating…

Q: If the rate of inflation is 4.5%, what nominal interest rate is necessary for you to earn a 2.5%…

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

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: (TRUE or FALSE?) The PV of the ordinary annuity is larger than the PV of the annuity due because the…

A: The problem case focuses on evaluating the statement that says that the PV of an ordinary annuity is…

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: The real interest rate is 5% and the inflation rate is 3%. What is the nominal interest rate? Round…

A: nominal interest rate = real interest rate + inflation rate

Q: (Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nom to be if…

A: The nominal interest rate is usually greater than the inflation rate by the amount of the expected…

Q: With a zero interest rate both the present value and the future value of an N payment annuity would…

A: The formula to calculate present value of an annuity is given below:

Q: What will the money rate of interest have to be at a 6% inflation rate to entice people to keep the…

A: given, real rate = 5% inflation= 6%

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: If Treasury bills are currently paying 6.35 percent and the inflation rate is 1.6 percent, what is…

A: The question is related to the approximate real rate and exact real rate. Bothe the rates are…

Q: Suppose the real rate is 7 percent and the inflation rate is 2.6 percent. What rate would you expect…

A: concept. (1+Rf)  = (1 + RR) * (1+IR) where , Rf = risk free rate RR =real rate IR = inflation rate

Q: Suppose the real rate is 4.5 percent and the inflation rate is 6.1 percent. What rate would you…

A: Treasury bills are the instruments that are issued by the government. The treasury bills are issued…

Q: (Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of…

A: Nominal interest rate is the percentage increase in money paid to lender for use of borrowed money.

Q: Assume that the real rate of interest is 2.00 % and the inflation rate is 6.00% What is the value…

A: Real interest rate = 2%Inflation rate = 6%Period = 12 yearsFuture value = $12,895

Q: You observe that the current interest rate on short-term U.S. Treasury bills is 4.86 percent. You…

A: Nominal rate = 0.0486 Inflation rate = 0.0165 Real rate of interest = ?   Real rate of interest is…

Q: The real rate is 4 percent and the inflation rate is 5.6 percent.    What rate would you expect to…

A: When the money supply increases over the period of time then by adversely affects the demand and…

Q: Related to Checkpoint​ 9.6) ​(Inflation and interest rates​) What would you expect the nominal rate…

A: Nominal Interest Rate is that rate of interest which includes the inflation rate of that currency.…

Q: If Treasury bills are currently paying 6.25 percent and the inflation rate is 1.8 percent, what is…

A: The real rate refers to the rate of interest that is being received by the investors, and lenders,…

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”.