Using your phone's internet browser
go to:
Click and drag this link to
the Home icon in your browser.

What is the formula for real rate of interest?

Tags: money, real estate, politics & government
Asked by mani vijay, 10 Dec '12 05:27 pm
  Invite a friend  |  
  Save  |  
 Earn 10 points for answering
Answer this question  Earn 10 points for answering    
4000 characters remaining  
Keep me signed inNew User? Sign up

Answers (1)


The real interest rate is the rate of interest an investor expects to receive after allowing for inflation. It can be described more formally by the Fisher equation, which states that the real interest rate is approximately the nominal interest rate minus the inflation rate. If, for example, an investor were able to lock in a five percent interest rate for the coming year and anticipated a two percent rise in prices, he would expect to earn a real interest rate of three percent. This is not a single number, as different investors have different expectations of future inflation. Since the inflation rate over the course of a loan is not known initially, volatility in inflation represents a risk to both the lender and the borrower.
Answered by Ataur Rahman, 10 Dec '12 05:28 pm

Report abuse
Not Useful
Your vote on this answer has already been received

Ask a Question

Get answers from the community

600 characters remaining

Related Answer


Formula is amount of money accumulated after n years, including interest. is equal to P multiplied by 1 r/n whole to the power" nt " where P is pr..more