What is the real rate of interest if the nominal rate of interest is 15%, the IP is 3%, the DRP is 3%, the MRP is 3%, and the LP is 2%?
A)3%
B)4%
C)5%
D)none of the above

Question

Quizplus · Accepted Answer

The real rate of interest is calculated as nominal rate of interest - inflation premium (IP) - default risk premium (DRP) - maturity risk premium (MRP) - liquidity premium (LP).

Real rate of interest = 15% - 3% - 3% - 3% - 2% = 4%

Therefore, the answer is B) 4%.

What Is the Real Rate of Interest If the Nominal