Negative realized real rates of interest are associated with periods where
A) inflation forecasts significantly underestimate inflation.
B) nominal interest rates were too high relative to actual inflation.
C) prior inflation forecasts overestimated inflation.
D) bond prices were priced too low relative to actual inflation.

Question

Quizplus · Accepted Answer

Negative realized real rates of interest occur when inflation is higher than expected, meaning inflation forecasts significantly underestimated inflation, leading to lower real returns than anticipated.

Negative Realized Real Rates of Interest Are Associated with Periods