Which of the Following Statements About Real and Nominal Interest

question 85

Multiple Choice

Which of the following statements about real and nominal interest rates is correct?

• A)Real interest rates can be either positive or negative,but nominal interest rates must be positive.
• B)Real interest rates and nominal interest rates must be positive.
• C)Real interest rates must be positive,but nominal interest rates can be either positive or negative.
• D)Real interest rates and nominal interest rates can be either positive or negative.

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Definitions:

Canadian Dollars

The official currency of Canada, often represented by the symbol CAD or sometimes C$ to distinguish it from other dollar-denominated currencies.

Foreign Currency Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specific amount of foreign currency at a set price within a specified time period.

U.S. GAAP

United States Generally Accepted Accounting Principles, a framework of accounting standards, guidelines, and procedures used in the United States.

Foreign Exchange Risk

The potential for financial losses due to changes in exchange rates affecting the value of foreign-currency-denominated assets and liabilities.