Answered

Assume the nominal interest rate on a 15-year fixed-rate mortgage loan is 5 percent. If the expected inflation rate is 2 percent, the expected real interest rate is

Answer :

abiolataiwo2015

If the expected inflation rate is 2 percent, the expected real interest rate is 3%.

Expected real interest rate

Using this formula

Expected real interest rate=Nominal interest rate-Expected inflation rate

Where:

Nominal interest rate=5%

Expected inflation rate=2%

Let plug in the formula

Expected real interest rate=5%-2%

Expected real interest rate=3%

Inconclusion if the expected inflation rate is 2 percent, the expected real interest rate is 3%.

Learn more about expected real interest rate here:https://brainly.com/question/25456127

Other Questions