Calculate the nominal rate of interest given a real rate of 8% and an inflation rate of 2%.
A) 10.75%
B) 10.48%
C) 10.16%
D) 10.01%
E) 9.86%

Question

Quizplus · Accepted Answer

The nominal interest rate can be calculated using the formula: (1 + nominal rate) = (1 + real rate) * (1 + inflation rate). Substituting the given values: (1 + nominal rate) = (1 + 0.08) * (1 + 0.02) = 1.08 * 1.02 = 1.1016. Thus, the nominal rate is 10.16%.

Calculate the Nominal Rate of Interest Given a Real Rate