Finance Questions

Tagged: inflation rate, Interest rate, Yield curve

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June 17, 2017 at 5:33 am #16021

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Keymaster

If the nominal interest rate is 7% per year and the inflation rate is 2% per year, what is the exact real rate of return?

June 17, 2017 at 5:55 am #16022

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Keymaster

Solution
The exact real rate of return is 1.07/1.02 – 1 ≈ 4.90%
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