Assuming the Same Coupon Rate and Maturity Length, the Difference

question 34

Multiple Choice

Assuming the same coupon rate and maturity length, the difference between the yield on a Real Return Bond and the yield on a Canada bond provides insight into ________.

• A) the nominal interest rate
• B) the real interest rate
• C) the nominal exchange rate
• D) the expected inflation rate

---

Definitions:

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, thus earning interest in subsequent months.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets with tax benefits for retirement.

Deposits

Funds placed into an account at a financial institution for safekeeping or to earn interest.

Compounded Monthly

An interest calculation method where interest is added to the principal balance on a monthly basis, resulting in interest being earned on top of interest.