Business, 20.07.2021 01:00 hjeffrey168

Assume you lend $10,000 for a five (5) year period. The current the real rate at the time you lend the money is 2.3%. You charge no risk premium on the loan. At the end of the 5-years loan period you receive back your $10,000 and then decide to determine your rate of return. You collect the following information for your calculation. Expected Actual Annual
Year Annual Inflation Inflation
1 1.10% 0.50%
2 2.10% 2.03%
3 2.50% 1.90%
4 1.80% 3.21%
5 2.15% 2.24%
Part 1. Using the Fisher Equation, what is your expected required rate of return on the loan?
Part 2 Using the Fisher Equation, what is your realized required rate of return on the loan?

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Assume you lend $10,000 for a five (5) year period. The current the real rate at the time you lend t...

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