OmarAdnan

FinNinja Wrote:
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> Damil -
>
> US Real Risk free s/b approx. 2.5 not 3.5,
> correct?
>
> The way you calc this is:
> (1+nominal) = (1+real) * (1+ Infl.) right?
>
> so (1+real) = (1+nominal) / (1+ Infl.) or
> 1.04/1.015 = 2.46%, right - I'm only asking b/c
> I'm still a little fuzzy on this.

I see a lot of different equations used for the relation between real and nominal rates and inflation.

1) (1+real) = (1+nominal) / (1+ Infl.)
2) real = nominal - inflation

One for growth.. but I can't remember that one (if it is any different)

What is the difference between those two above? Is the real = nominal - inflation more of an approximation of the first one?