Author Question: You want to make a 10% real return on a loan that you are planning to make, and the expected ... (Read 93 times)

nelaaney · **on:** Apr 19, 2019

Question 1

If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is

◦ 28%.
◦ 4%.
◦ -3%.
◦ -7%.

Question 2

You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of

◦ -6%.
◦ 6%.
◦ 10%.
◦ 14%.

shaikhs · **Reply #1 on:** Apr 19, 2019

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