Real interest ratesthe two-year interest rate is 132 and, Ask an Expert

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Real interest rates

The two-year interest rate is 13.2% and the expected annual inflation rate is 6.6%.

a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Expected real interest rate %

b-1. If the expected rate of inflation suddenly rises to 8.6%, what does Fisher’s theory say about how the real interest rate will change?

b-3. If the expected rate of inflation suddenly rises to 8.6%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Nominal rate %

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92714843

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