The nominal interest rate is 10%, the expected inflation rate is 5%, and the combined state-federal tax rate is 35%. The expected after-tax real interest rate is
(a) 1.50%.
(b) 3.25%.
(c) 5.00%.
(d) 6.50%.
Answer: A
The nominal interest rate is 10%, the expected inflation rate is 5%, and the combined state-federal tax rate is 35%. The expected after-tax real interest rate is
(a) 1.50%.
(b) 3.25%.
(c) 5.00%.
(d) 6.50%.
Answer: A
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