Answer:
6.629 percent
Explanation:
The computation of the inflation free i.e. real interest rate is shown below:
Inflation free interest rate is
= (1 + market interest rate) ÷ (1+inflation rate) - 1
= (1.126 ÷ 1.056) - 1
= 6.629 percent
We simply applied the above formula so that the correct value could come
And, the same is to be considered
By dividing the market interest rate from the inflation rate we can easily calculate the real interest rate
