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Fisher effect

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16. If you invest in CDs earning an interest rate of 9%, the interest is taxable in the 28%
bracket, and inflation is 5%, what is the real rate of interest you receive after tax?

17. If you invest in CDs earning an interest rate of 4%, the interest is taxable in the 28%
bracket, and inflation is 3%, what is the real rate of interest you receive after tax?

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Solution Summary

This posting provides the solution to the student's question. The Fisher Effects for interest rates are provided.

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