What will be the nominal interest rate Pablo receives on his loan to Kristine for one year?

The nominal interest rate that Pablo receives on his loan to Kristine for one year is determined by the stated interest rate without any adjustment for inflation or other factors. In this scenario, the nominal interest rate is specifically the amount agreed upon in the loan contract.

The choice of 5.5 percent reflects the most likely value considering typical market rates and reasonable lending practices. It takes into account the risk and opportunity cost associated with lending money, making it a competitive yet fair rate.

Other rates presented are either too low, suggesting an unrealistic return for lending money, or too high, which may not align with common lending scenarios. Therefore, 5.5 percent represents the nominal interest rate that balances the expectations of the lender and the borrower in a market context.