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The interest paid to bondholders represents the principal of the bond.
Inflation Rate
The upward trajectory of prices for goods and services, causing a consequent decline in how much one can purchase.
Purchasing Power
The purchasing power of a currency, showing the quantity of goods or services one unit can acquire.
Nominal Interest Rate
The interest rate before adjustments for inflation, representing the face value of financial transactions.
Real Interest Rate
The interest rate adjusted for inflation, representing the true cost of borrowing and the true yield on savings.
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