What is the expected real rate of interest for an account that offers a 12% nominal rate of return when the rate of inflation is 6% annually?
A) 5.00%
B) 5.66%
C) 6.00%
D) 9.46%

Name: What is the expected real rate of interest for an account that offers a 12% nominal rate of return when the rate of inflation is 6% annually? A) 5.00% B) 5.66% C) 6.00% D) 9.46%
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Question

Quizplus · Accepted Answer

1 + real interest rate = (1 + nominal interest rate) / (1 + inflation)1 + real interest rate = 1.12 / 1.06Real interest rate = 5.66%

What Is the Expected Real Rate of Interest for an Account