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Due to the integrated nature of their capital market, investors in both the United States and the U.K. require the same real interest rate, 5%
Due to the integrated nature of their capital market, investors in both the United States and the U.K. require the same real interest rate, 5% on their lending. There is a consensus in capital markets that the inflation rate is likely to be 6% in the United States and 4% in the U.K. for the next three years. What is the nominal interest rate per annum in the United States, assuming that the Fisher effect holds?
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