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Basic Question 4 of 4
If other factors are equal, a decrease in the expected rate of inflation will most likely result in a decrease in ______.
B. the nominal risk-free rate
C. both real and nominal risk-free rates
A. the real risk-free rate
B. the nominal risk-free rate
C. both real and nominal risk-free rates
User Contributed Comments 6
| User | Comment |
|---|---|
| Stacerz02 | Makes sense |
| wsiyer | yes! |
| thebkr777 | Nominal = Real rfr + expected r |
| ashish100 | coolio |
| ashish100 | Wait no Nominal rfr = real rfr + expected inflation boiiii lets get it |
| zeanww | Let's goooo |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain the notion that to affect market values, economic factors must affect one or more of the following: (1) default-free interest rates across maturities, (2) the timing and/or magnitude of expected cash flows, and (3) risk premiums;
explain the role of expectations and changes in expectations in market valuation;
CFA® 2025 Level II Curriculum, Volume 6, Module 37.