If the Actual Inflation Was 4 Percent Over the Past

question 45

Multiple Choice

If the actual inflation was 4 percent over the past year and you owned a one-year bond that paid 4 percent interest, what was your after-tax realized real interest rate if your tax rate was 15 percent?

• A)−0.6 percent
• B)0.0 percent
• C)1.1 percent
• D)2.0 percent