CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

According to the Fisher effect, if the real interest rate is 2% and the risk premium is 4%, an increase of inflation rate from 3% to 4% will increase the nominal interest rate by ______.

A. 0%
B. 1%
C. 2%
Correct Answer: B

Nominal interest rate = real interest rate + inflation rate + risk premium

User Contributed Comments 2

User Comment
KarenMaciel 2%+4%+4% = 10%
2%+4%+3% = 9%

change = 10 -9 =1%
ashish100 ^ ty if you ever come back to this page.
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