Write down the relationship between nominal rates of return


1. From memory, write down the relationship between nominal rates of return (rnominal), real rates of return (rreal), and the inflation rate (π).

2. The nominal interest rate is 20%. Inflation is 5%. What is the real interest rate?

3. If the real interest is 3% per annum and the inflation rate is 8% per annum, then what is the present value of a $500,000 nominal payment next year?

4. What are the three types of Treasuries? How do they differ?

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Financial Management: Write down the relationship between nominal rates of return
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