If the Nominal Interest Rate Is 10 Per Cent, the Inflation

question 9

Multiple Choice

If the nominal interest rate is 10 per cent, the inflation rate is 6 per cent, and the tax rate on interest income is 25 per cent, what is the after-tax real interest rate?

• A) 3.5 per cent
• B) 1.5 per cent
• C) 6.0 per cent
• D) 4.0 per cent
• E) 3.0 per cent

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