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If the Actual Inflation Was 4 Percent Over the Past

Question 45

Multiple Choice

If the actual inflation was 4 percent over the past year and you owned a one-year bond that paid 4 percent interest, what was your after-tax realized real interest rate if your tax rate was 15 percent?


A) −0.6 percent
B) 0.0 percent
C) 1.1 percent
D) 2.0 percent

Correct Answer:

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