Suppose the Bank of Montreal Wants a 4% Real Rate

question 92

Multiple Choice

Suppose the Bank of Montreal wants a 4% real rate of return on all its loans,and anticipates an annual inflation rate of 6%.It should therefore lend its money at a nominal interest rate of

• A)10%.
• B)9%.
• C)5%.
• D)4%.
• E)1%.

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Definitions:

Trade Regulations

Laws, rules, and standards that govern how trade is conducted internationally and domestically.

Industrial Infrastructure

The underlying foundation of facilities, systems, and services needed for the operation of an industry, including transportation, communication, and utilities.

Business Norms

Accepted practices, behaviors, and standards within the business community, often varying by industry or region.

Technological Environment

The aspect of the external business environment that relates to the development, availability, and application of technology affecting businesses.