Question
Suppose the nominal interest rate is 5.5 percent and the expected inflation rate is 1.5 percent. What is the real interest rate? (Calculate it using
Suppose the nominal interest rate is 5.5 percent and the expected inflation rate is 1.5 percent. What is the real interest rate? (Calculate it using both (a) the exact
model and (b) the approximate model for full credit.) (a) The exact model
b) The approximate model
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Mathematics Of Finance
Authors: Robert Brown, Petr Zima
2nd Edition
0071756051, 9780071756051
