(All Steps) Assume that an investor desires to earn a real rate of return of 7% on a loan. If the expected rate of inflation is 12% per year, what nominal

Question: Assume that an investor desires to earn a real rate of return of 7% on a loan.

If the expected rate of inflation is 12% per year, what nominal rate of interest should the investor set on the loan?
The investor sets the nominal rate indicated in part (a), but the actual rate or inflation was 10%. What was the actual real rate of interest earned on the loan for one year?

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(All Steps) Assume that an investor desires to earn a real rate of return of 7% on a loan. If the expected rate of inflation is 12% per year, what nominal

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