Which of these is TRUE of the nominal risk-free rate and the real risk-free rate? Real...
- Which of these is TRUE of the nominal risk-free rate and the
real risk-free rate?
- Real risk-free rate must always include inflation premium
- Nominal risk-free rate includes inflation while real risk-free rate does not
- Real risk-free rate excludes the product of inflation and inflation premium
- None of the above
Homework Answers
1+ Nominal Rate = (1 + Real Rate) * (1+Inflation Rate)
So, Nominal Rate always include Inflation while Real Rate does not.
Option B is correct.
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