20. You open an investment account that earns a nominal interest rate of 4.2% a year....

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20. You open an investment account that earns a nominal interest rate of 4.2% a year. The current consumer price index is 108. In one year, the consumer price index is expected to go to 112. What is your expected real rate of return? 20. You open an investment account that earns a nominal interest rate of 4.2% a year. The current consumer price index is 108. In one year, the consumer price index is expected to go to 112. What is your expected real rate of return?

Answer rating: 100% (QA)

To calculate the expected real rate of return we use the Fisher equation Real Rate of Return Nomi... View the full answer