X-Message-Number: 27273
From: "marta sandberg" <>
Subject: The REAL Interest Rate
Date: Tue, 25 Oct 2005 17:37:28 +0800

John de Rivaz wrote:
If the after tax return from a fixed interest is x% and the inflation rate 
is y% then the real return is x%-y%, call it r%.

- - -

If you wish to be very finicky, then the real rate of interest (R) is

R = (1+i)/(1+r)   1

Where the expected rate of inflation is   i'  and the given or nominal rate 
of return is   r'

Of course,  r  i' is a simple close approximation.

Marta

Sorry John, but I am just studying for my Finance exam at uni.

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