Realized real rates of interest
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I need to understand why realized real rates of interest are sometimes negative but the expected real rates are always positive.
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I need to understand why realized real rates of interest are sometimes negative but the expected real rates are always positive.
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Real interest rate = (1+ nominal interest rate ) / (1+ inflation rate ) -1
When the inflation rate is higher than the nominal interest rate, the realized real interest rate will be negative.
The fundamentals of time value of money and liquidity benefits of money in hand warrants that the value of a $ now should be higher than a $ one year from ...
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