Corporation XYZ can borrow for one year at a semi-annually compounded nominal interest rate of 6%.

i. What is the equivalent interest rate, compounded once per year?

ii. If the annualized inflation rate is 2.5%; what is the annually compounded real interest rate at which XYZ can borrow?

iii. Holding prices constant, how much of a return do investors demand for delaying consumption for a year?