- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics
- Reading 10. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 3. A Long-Term Framework for Exchange Rates
CFA Practice Question
Suppose that the one year interest rate is 5% in Germany. The expected inflation rate is 3%. If the international Fisher effect holds, what is the real interest rate in Germany?
Correct Answer: 2%
5% - 3%.
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