Desired real risk-free interest rate

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Reference no: EM13728194

An investor wants to be able to buy 4 percent more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2 percent. Which statement(s) below is/are true?

I. 4 percent is the desired real risk-free interest rate.

II. 6 percent is the approximate nominal rate of interest required.

III. 2 percent is the expected inflation rate over the period.

II only

I, II, and III are true

III only

I and II only

I only

Reference no: EM13728194

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