Ask Question
20 June, 23:39

If the rate of inflation is 5.4 % , what nominal interest rate is necessary for you to earn a 2.7 % real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.)

+2
Answers (1)
  1. 20 June, 23:53
    0
    8.2458%

    Explanation:

    According to Fisher Effect equation:

    (1 + nominal interest rate) = (1 + real interest rate) x (1 + expected annual inflation)

    1 + nominal interest rate = 1.027 x 1.054

    --> Nominal interest rate = 8.2458%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If the rate of inflation is 5.4 % , what nominal interest rate is necessary for you to earn a 2.7 % real interest rate on your investment? ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers