A bank seeks a 4 real return on its loans and predicts a 4 annual ...

[joe]

A bank seeks a 4 real return on its loans and predicts a 4 annual rate of inflation. It should therefore charge a nominal interest rate of
 
  A) 0.
  B) 1.
  C) 4.
  D) 8.
  E) 12.

Question 2

A financial institution that wants a 5 percent real return on its loans and contemplates a 4 percent annual inflation rate should loan at a nominal interest rate of approximately
 
  A) minus 1 percent.
  B) 1 percent.
  C) 9 percent.
  D) 15 percent.
  E) 20 percent.

[fdliggud]

Answer to Question 1

D

Answer to Question 2

C

[joe]

Thank you

[fdliggud]

No problemo