Suppose at the Beginning of 2017, I Loaned Out $100

question 80

Essay

Suppose at the beginning of 2017, I loaned out $100 and at the end of the year was paid back $108. The inflation rate during the year was 3 percent.
(A) What wras the stated interest rate?
(B) What was the real interest rate?

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Definitions:

Rate Of Return

A measure of the profitability of an investment, calculated as the percentage ratio of profit or loss to the initial investment cost.

Assigned

In derivatives trading, it refers to the notification that an option holder has decided to exercise their option.

Financial Executives

Individuals who manage financial planning, decision making, and control in an organization.

Accounting Values

The monetary amounts associated with assets, liabilities, equity, income, and expenses recorded in a company's financial statements.