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The [...] consists of the real rate (a pure rate of interest) and an inflation premium.
nominal cost of money

Tags
Question
The [...] consists of the real rate (a pure rate of interest) and an inflation premium.
?

Tags
Question
The [...] consists of the real rate (a pure rate of interest) and an inflation premium.
nominal cost of money
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Subject 1 Time Value of Money and Interest Rates
licate interest rates: Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into account the expected increase in prices. <span>The nominal cost of money consists of the real rate (a pure rate of interest) and an inflation premium. Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default

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