If annual interest rate is paid at a nominal rate of 3%, borrowing rate is 5%...
If annual interest rate is paid at a nominal rate of 3%, borrowing rate is 5% and the rate of inflation is 1.5%, what is the real rate of return approx?
Homework Answers
Solution:
Real rate of return = Nominal rate of interest - rate of inflation
Real rate of return = 3% - 1.5%= 1.5%
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