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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 |
Your review questions and global ranking system were so helpful.
Lina
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.