When the Inflation Rate Is Negative, the

question 80

Multiple Choice

When the inflation rate is negative, the

• A)real interest rate is greater than the nominal interest rate.
• B)nominal interest rate is zero.
• C)real interest rate equals the nominal interest rate.
• D)real interest rate is less than the nominal interest rate.

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Definitions:

Held To Maturity

Refers to debt securities that an investor intends and has the ability to hold until they mature, as opposed to selling before maturity.

Stock Dividend

A distribution of additional shares of a company’s own stock to its shareholders instead of cash, usually based on a fixed ratio to the current holdings.

Gain (Loss)

The financial result that occurs when the selling price of an asset is higher (gain) or lower (loss) than its purchase price.

Compute

To calculate or process by means of a computer or mathematical operations.