Test the method, build your spreadsheet.
RRM financing features fixed real payments and fixed real returns that remove risk from the financing process and create value for both borrowers and lenders. RRM uses a patented process for creating and servicing an equivalent nominal-dollar instrument. The explicit specification of an equivalent nominal-dollar instrument provides financial professionals the nominal-dollar interest rates, interest amounts, payment amounts, and principal balance amounts they need to create
Stupidly Simple
Stupidly Simple. A common lower ground for global capital fixed income formation. You can fix either the nominal interest rate or the real interest rate, but not both. īNominal = ĩBusiness Risk + ĩExpected Inflation + ĩInflation Risk Premium + ĩRisk-Free Real So, in fixing the nominal rate (on the left-hand-side) the risk-free real return is used to fix the nominal rate, but the realized real return becomes a variable that changes as the realized inflation rate changes: ĩReal