Market interest rate

1.      State the conditions under which the market interest is (a) higher than, (b) lower than, and (c) the same as the real interest rate.

2.      Calculate the inflation-adjusted interest rate when the annualized inflation rate is 27% per year (Caracas, 2004) and the real interest rate is 4% per year.

3.      What annual inflation rate is implied from a market interest rate of 15% per year when the real interest rate is 4% per year?

1.      What market interest rate per quarter would be associated with a quarterly inflation rate of 5% and a real interest rate of 2% per quarter?

2.      When the market interest rate is 48 % per year, compounded monthly (due to hyperinflation), what is the monthly inflation rate if the real interest rate is 6% per year, compounded monthly?


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