The_________ Rate of Interest Creates an Equilibrium Between the Supply

question 134

Multiple Choice

The_________ rate of interest creates an equilibrium between the supply of savings and the demandfor investment funds.

• A) inflationary
• B) nominal
• C) risk-free
• D) real

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Definitions:

Hurdle Rate

The minimum acceptable rate of return on an investment, used as a benchmark for deciding whether to pursue a project.

Internal Rate of Return

A calculation used to evaluate the profitability of potential investments.

Payback Period

The length of time it takes to recover the initial cost of an investment.

Accounting Rate of Return

A financial metric used to assess the profitability and potential return of an investment or project, based on the average annual profit compared to the initial investment cost.