Rate = real risk free + inflation premium + default risk premium + liquidity premium + maturity premium
nominal rate on the left?
heha168 Wrote: ------------------------------------------------------- > nominal rate on the left? think so – JUST RAMPING HARD INTO QUANT NOW AND WILL BE POSTING TRICKIES FOR A FEW HRS HERE.
Nominal rate is approximately the real rate plus inflation… this is your total interest rate for the purposes of things like capital allocation cash flow discounting.
Yes Nominal. The condensed format is: Rate of return= Real risk free + inflation premium + risk premium
ok, thx R = nominal - inflation then ?
Real Interest rates= Nominal Interest rates - inflation But now we are moving on the economics session 