Interest rates that are adjusted for expected inflation are known as:
A) coupon rates.
B) ex ante real interest rates.
C) ex post real interest rates.
D) nominal interest rates.

Question

Quizplus · Accepted Answer

Nominal interest rates do not account for expected inflation, while ex ante real interest rates do adjust for expected inflation. Coupon rates refer to the interest rate paid on a bond and do not necessarily account for inflation. Ex post real interest rates are the actual interest rates that were earned after accounting for inflation, but this is not the same as the expected inflation-adjusted interest rate represented by ex ante real interest rates.

Interest Rates That Are Adjusted for Expected Inflation Are Known