1 if expected inflation is 100 and the real required return, Ask an Expert

Management Studies

1. If expected inflation is 100% and the real required return is 5%, what should the nominal interest rate be according to the Fisher effect?

2. In early 1996, the short-term interest rate in France was 3.7% and forecast French inflation was 1.8%. At the same time, the short-term German interest rate was 2.6% and forecast German inflation was 1.6%.

a. Based on these figures, what were the real interest rates in France and Germany?

b. To what would you attribute any discrepancy in real rates between France and Germany?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92033204

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