Inflation and Real Rates of Interest | Exam FM | Financial Mathematics Lesson 28 - JK Math

Inflation and Real Rates of Interest (Financial Mathematics Lesson 28)

In this lesson we learn about how rates of inflation affect interest rates and the purchasing power of money, and how to find “real” rates of interest, which are rates that are adjusted for inflation. We learn a formula for calculating real rates of interest, and use it in an example problem.

(Shoutout to one of my viewers, Andile Mthembu, for requesting the coverage of this topic!)

This course is designed to help students understand the concepts of mathematics of investment and credit, as well as provide a starting point in preparation for the Actuarial Exam FM (Financial Mathematics).

Financial Mathematics requires a proficient understanding of Calculus concepts such as derivative and integration techniques. This implies that a solid understanding in various algebra skills, including manipulating equations, basic factoring methods, solving logarithmic equations, and more, are also required to fully comprehend and learn the concepts of the Financial Mathematics course.

Video Chapters:
0:00 What is Inflation and a Real Rate of Interest?
2:28 Example Problem
8:37 Formula for Real Rates of Interest

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[harihdan]

My friend introduced this playlist to me & since then had been binging every single of your videos in this playlist 🎉 i’ll be sitting for my financial maths final exam in less than 3 hours. Your videos truly helped me so much in understanding the concept. Thank you JK Math and keep up the work!

[_andilemthembu]

Yayyyy, finally! Thank you!!

I really love this title sequence!

PS: I qualified for the next Financial Mathematics course at my school! Now I'm going to GOBBLE down those videos on bonds and amortization!

The work you do is amazing! 💕👨🏾‍🎓

[casper]

Do you plan on making a video about sinking funds ? Also, thank you very much for these videos as they have helped my study a lot.

[GF]

What would be the difference between dividing 5 by 115 to get the real interest or just taking the 5 as the real rate of interest?