Question
Consider the Fischer Effect as represented by the Fischer Equation: 1 + RNOMINAL= (1 + RREAL)(1 + Inflation) RNOMINAL= (1 + RREAL)(1 + Inflation) -
Consider theFischer Effectas represented by the Fischer Equation:
1 + RNOMINAL= (1 + RREAL)(1 + Inflation)
RNOMINAL= (1 + RREAL)(1 + Inflation) - 1
And sometimes it is simplified to:
RNOMINAL= (RREAL) + (Inflation)
What difference does thissimplificationmake, and is it significant?
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CFIN
Authors: Scott Besley, Eugene Brigham
5th edition
1305661656, 9781305888036 , 978-1305666870
