Question: This is a question on a past exam paper for finance (financial markets institutions and money) i was wondering if i had done it correctly

This is a question on a past exam paper for finance (financial markets institutions and money) i was wondering if i had done it correctly and what workings i would need to show to answer it.

1. a. A bank which is considering a fixed rate, three year loan to a customer requires a 2% per annum real return and makes the following inflation rate forecasts:Year 1:1.5%

Year 2:1.2%

Year 3:2.0%

What is an appropriate three year interest rate for the loan

i got 2.23 per annum.

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