What is the real rate of interest if the nominal rate of interest is 15%, the IP is 3%, the DRP is 3%, the MRP is 3%, and the LP is 2%?
A) 3%
B) 4%
C) 5%
D) 6%

Name: What is the real rate of interest if the nominal rate of interest is 15%, the IP is 3%, the DRP is 3%, the MRP is 3%, and the LP is 2%? A) 3% B) 4% C) 5% D) 6%
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Question

Quizplus · Accepted Answer

Real rate of interest = nominal rate of interest - (inflation premium + default risk premium + maturity risk premium + liquidity premium)
= 15% - (3% + 3% + 3% + 2%)
= 4%

What Is the Real Rate of Interest If the Nominal