Ask Question
18 June, 14:02

Kaitlin has $10,000 of savings that she may deposit with her local bank. Kaitlin wants to earn a real rate of return of at least 4 percent and she is expecting inflation to be exactly 3 percent. What is the lowest nominal interest rate that Kaitlin would be willing to accept from her local bank A. 4 percent B. 5 percent C. 6 percent D. 7 percent

+5
Answers (1)
  1. 18 June, 15:31
    0
    (D) 7 percent

    Explanation:

    Nominal interest rate is approximately equal to real interest rate + inflation rate

    = 4% + 3%

    = 7%.

    Thus, the minimum nominal interest rate that Kaitlin would be willing to accept from her local bank is 7%.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Kaitlin has $10,000 of savings that she may deposit with her local bank. Kaitlin wants to earn a real rate of return of at least 4 percent ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers