Real Interest Rates

Real Interest Rates - demand nominal returns that are high...

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Real Interest Rates The market interest rate can be divided into a required real rate of return and the expected inflation rate over the period. Market interest rates are nominal rates, measured in current dollars; but investors are concerned about their real, or inflation- adjusted returns. As a result, investors
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Unformatted text preview: demand nominal returns that are high enough to protect them against expected inflation and still yield a real return that makes lending attractive. nominal interest rate = real interest rate + expected inflation rate...
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This note was uploaded on 11/22/2011 for the course FIN FIN1100 taught by Professor Bradrifkin during the Fall '09 term at Broward College.

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