SOA Exam FM Sample Question 406
Study guide: Exam FM-2
An investor purchases a Treasury bond for 100 today. The bond earns an annual effective rate of interest of 9%. The annual rate of inflation is 5%.
Calculate the real annual effective rate of interest earned by the investor.
- A) -3.7%
- B) 3.8%
- C) 4.0%
- D) 14.0%
- E) 14.5%
Answer this question and see the worked solution