If he were that kind of hands-on manager, this mess might not have happened in the first place.
The real risk-free rate is 4%. 1. The real risk-free rate is 4%. Inflation is expected to be 3% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero.
Year 2014: 8% - (-4.2%) = 12.2%. So the real interest rate is 5% in year 2012, 3.9% in year 2013, and 12.2% in. year 2014. b) Suppose you are offered the following deal: you lend $200 to a friend at the. beginning of year 2012 and charge him/her the nominal interest rate of 15%. and he/she pays you back $230 at the end of year 2012.