For example, if the inflation rate is 5%, on a one-year loan of $1,000 with an 8% nominal interest rate the real interest rate would be 8% minus 5% or 3%. The real interest rate will usually be ...

The formula for the risk-free rate is simple: It’s just the current yield of the three-month T-bill. However, the formula to calculate the real risk-free rate has a few more steps. First, here ...

All money is lent into existence. Thus, if interest rates are higher, less money will be desired to be borrowed, and the ...