The interest rate (yield) on Treasury bonds is 4.1% and the expected inflation rate is 2.4%.
What is the exact real rate of interest rate?
real rate of interest =(1+nominal rate)/(1+inflation rate)-1
=[(1+0.041)/(1+0.024)]-1
=(1.041/1.024)-1
=1.66%(Approx).
The interest rate (yield) on Treasury bonds is 4.1% and the expected inflation rate is 2.4%....
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