##### Homework question help needed

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If a nominal rate of interest is 13.36%, and the real rate of interest is 8.96%. What is the expected rate of inflation?

Jul 2nd, 2015

Nominal Interest Rate = Real Interest Rate + Expected Inflation Rate.
13.36=8.96+Expected Inflation Rate
Expected Inflation Rate=13.36-8.96
Expected Inflation Rate=4.4%...................................................

Jul 2nd, 2015

This need to be round two decimal places, sorry I forgot to post that

Jul 2nd, 2015

4.40%

Jul 2nd, 2015

it stated that answer was incorrect

Jul 2nd, 2015

4.40 is incorrect is stating

Jul 2nd, 2015

no it is correct because the formula is there you can check that

Jul 2nd, 2015

when I enter 4.40 is stating that the answer is incorrect

Jul 2nd, 2015

I will send you what it states

Jul 2nd, 2015

The relationship between the nominal rate, the real rate and inflation is given by:

(1+kn)=(1+kr)x(1+3.16)

Jul 2nd, 2015

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Jul 2nd, 2015
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Jul 2nd, 2015
Sep 23rd, 2017
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