The difference between a nominal interest rate and the real interest rate is approximately: a. The rate of inflation b. The coupon rate c. The required rate of return

The Fisher Effect says that the exact difference between nominal and real interest rates is: a. The rate of inflation and the difference in the buying power of your dollars b. Only the rate of inflation c. Only the difference in the buying power of your dollars

The Fisher Effect formula is R = r + h + r x h where R is the nominal interest rate, r is the real rate of interest, h is the rate of inflation. If r = 5% and h = 2%, then the nominal interest rate is: a. 17% b. 12% c. 7.1%