Posted by **jay** on Saturday, March 29, 2014 at 9:56am.

Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with interest of 5 percent a year. If the annual inflation rate turns out to be 10 percent,

(a) What is the real rate of interest on the loan?

For this I got -5%.

(b) What is the real value of the principal repayment?

?

## Answer This Question

## Related Questions

- Math. - For question 1-4 for the interest. All rates are annual interest rates. ...
- Finance - A Treasury note with a maturity of four years carries a nominal rate ...
- finance - 12. A Treasury note with a maturity of four years carries a nominal ...
- finance - 12. A Treasury note with a maturity of four years carries a nominal ...
- Math - You borrow $2,000 for a period of 4 years. You are charged simple ...
- Finance - A Treasury note with a maturity of four years carries a nominal rate ...
- eco - Suppose a person pays $80 of annual interest on a loan that has a 5 ...
- Money and Banking - One year ago, you bought a bond for $10,000. You received ...
- Economics - One year ago, you bought a bond for $10,000.00. You received ...
- Finance - One year ago, you bought a bond for $10,000. You received interest of...

More Related Questions