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What is the expected real rate of interest for an account that offers a 12% nominal rate of return when the rate of inflation is 6% annually?

What is the expected real rate of interest for an account that offers a 12% nominal rate of return when the rate of inflation is 6% annually?
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what is the expected real rate of interest for an account that offers a 12% nominal rate of return when the rate of inflation is 6% annually?

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User Kkaefer
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1 Answer

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Answer: 1 + real interest rate = (1 + nominal interest rate)/(1 + inflation)

1 + real interest rate = 1.12/1.06

Real interest rate = 5.66%

Step-by-step explanation:

answered
User Murat Aslan
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