Unit 4.2 : Nominal vs Real Interest Rates
0.0(0)
Studied by 1 person0.0(0)
Call Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt PlayCard Sorting
1/7
Earn XP
Description and Tags
Study Analytics
Name | Mastery | Learn | Test | Matching | Spaced |
|---|
No study sessions yet.
8 Terms
1
New cards
real interest rates
percentage increase in PURCHASING POWER that a borrower pays (adjusted for inflation)
2
New cards
nominal interest rate - expected inflation
real interest rate =
3
New cards
nominal interest rate
percentage increases in MONEY that borrower pays (NOT adjusted for inflation)
4
New cards
real interest rate + expected inflation
nominal interest rate =
5
New cards
interest rate; number of years (N)
You can determine the future value of any amount of money ($X) if you know the ____ and the ____
6
New cards
fv = $X[(1 + ir)^N]
equation to calculate the future value of $X in N years
7
New cards
present value
current worth of some future amount of money
8
New cards
pv = $X/[(1 + ir)^N]
equation to calculate the present value of $X in N years
Note 
Flashcards (49)