Question: 3. Conceptual Knowledge (15 Points). Answer the following: (a) 5 Points. What is the nominal interest rate? What is the real interest rate? How do

3. Conceptual Knowledge (15 Points). Answer the following: (a) 5 Points.

3. Conceptual Knowledge (15 Points). Answer the following: (a) 5 Points. What is the nominal interest rate? What is the real interest rate? How do they differ? Explain in detail. (b) 5 Points. What is the term structure of interest rates? What is an yield curve? Explain. (c) 5 Points. Why is the yield curve upward sloping? Explain

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