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Suppose you take out a loan at your local bank. The bank expects to earn an annual real interest rate equal to 4 4%. Assuming
Suppose you take out a loan at your local bank. The bank expects to earn an annual real interest rate equal to 4
4%. Assuming that the annualized expected rate of inflation over the life of the loan is 1.5
1.5%, determine the nominal interest rate that the bank will charge you.
The bank will charge you a nominal interest rate of
nothing
%.
I need to know how to work this problem.
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