Laura wants to get 8% in real return of her certificate of deposit. If the annual inflation rate is estimated at 2%, how much should her nominal interest be?
Question
Solution 1
To calculate the nominal interest rate, Laura needs to use the Fisher equation, which is:
1 + nominal rate = (1 + real interest rate) * (1 + inflation rate)
Laura wants a real return of 8% (or 0.08 in decimal form) and the inflation rate is estimated at 2% (or 0.02 in decimal form). Substituting t Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solv
Similar Questions
Laura wants to get 8% in real return of her certificate of deposit. If the annual inflation rate is estimated at 2%, how much should her nominal interest be?
An investment had a nominal return of 9.9 percent last year. The inflation rate was 3.1 percent. What was the real return on the investment?
Suppose that in a given year, the rate of inflation is 3 percent, and the nominal interest rate is 2 percent. The real interest rate is:
Martina received a $1200 bonus. She decided to invest it in a 3-year certificate of deposit (CD) with an annual interest rate of 1.34% compounded daily.
The nominal interest rate B*. includes inflation and the real rate of interest.Maximum number of characters (including HTML tags added by text editor): 32,000