A real rate of interest is the compensation paid by the borrower of funds to the lender.

Name: A real rate of interest is the compensation paid by the borrower of funds to the lender.
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A real rate of interest specifically refers to the rate of interest an investor expects to receive after allowing for inflation. It is different from the nominal interest rate as it takes into account the erosion of purchasing power due to inflation.

A Real Rate of Interest Is the Compensation Paid by the Borrower