Which of the Following Statements Is Correct

question 33

Multiple Choice

Which of the following statements is correct?

• A) The real interest rate is the sum of the nominal interest rate and the inflation rate.
• B) The nominal interest rate is the inflation rate minus the real interest rate.
• C) The nominal interest rate is the real interest rate minus the inflation rate.
• D) The real interest rate is the nominal interest rate minus the inflation rate.

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Definitions:

Cash Dividends

Payments made by a company out of its earnings to its shareholders in the form of cash.

Long-Term Investments

Assets that a company intends to hold for more than one year, such as stocks, bonds, real estate, or machinery.

Unrealized Gain-Equity

The increase in the value of investments that a company holds in other companies' stocks, which have not been sold and thus the gain has not been realized.

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental, which include terms related to the amount, interest rate, and maturity date.