Which of the Following Statement(s) Is(are) True

question 73

Multiple Choice

Which of the following statement(s) is(are) true?

• A) Inflation has no effect on the nominal rate of interest.
• B) The realized nominal rate of interest is always greater than the real rate of interest.
• C) Certificates of deposit offer a guaranteed real rate of interest.
• D) None of the options are true.

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Definitions:

Basic Earning Power Ratio

A financial metric that indicates how well a company's assets are generating income before the effects of taxes and financing costs.

Financial Leverage

The extent to which fixed-income securities (debt and preferred stock) are used in a firm’s capital structure. If a high percentage of a firm’s capital structure is in the form of debt and preferred stock, then the firm is said to have a high degree of financial leverage.

Tax Effects

The impact of taxation on an individual's or company's financial decisions or situations, especially regarding how investments and financial strategies are structured.

Liquidity Analysis

An examination of a company's ability to meet its short-term obligations with its current assets.