You Borrow $10,000 Today at a Nominal Rate of 5

question 8

Multiple Choice

You borrow $10,000 today at a nominal rate of 5 percent; inflation for the past 10 years has been exactly 2 percent.Today,inflation instantly rises to 7 percent and stays that way for the duration of your loan.Based on the above information,ceteris paribus (all else equal) ,today

• A) the real rate of interest on your loan is 14 percent.
• B) the real rate of interest on your loan was previously 10 percent and is now 35 percent.
• C) the real rate of interest on your loan is now -2 percent.
• D) you will pay the lender back exactly $9,500.
• E) you will pay the lender back exactly $10,700.

Understand how strategy maps demonstrate cause-and-effect relationships in business processes.

Recognize the reasons why improvements in non-financial performance do not always translate into profitability.

Comprehend different benchmarking strategies and their limitations.

Understand the general perspectives considered in the balanced scorecard for different types of businesses.

---

Definitions:

Possibility of Error

The probability that a statistical inference or decision made might be incorrect due to the limitations of sampling or experimental design.

Statistical Significance

The probability that an observed difference or relationship exists in a population, not just in the sample studied.

Hypothesized Reason

A suggested theory developed from minimal evidence intended to serve as a foundation for additional research.

Statistical Significance

A determination that a relationship between variables is not likely to be due to chance at a specified level of probability.