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Suppose r=12% and a bank offers inflation-adjusted term de- posits at a real rate of 2%. What rate of interest would an inves- tor have
Suppose r=12% and a bank offers inflation-adjusted term de- posits at a real rate of 2%. What rate of interest would an inves- tor have to earn on a standard term deposit in order to have the same after-inflation, after-tax return as on the indexed term de- posit if the investor has a tax rate of 25%
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