The Nominal Rate of Interest Is 8

question 102

Multiple Choice

The nominal rate of interest is 8.5 percent, and the real rate is 5 percent.The expected rate of return on an investment is 8 percent.The firm should

• A)not undertake the investment, because the expected rate of return of 8 percent is less than the nominal interest rate.
• B)not undertake the investment, because the expected rate of return of 8 percent is less than the nominal plus the real interest rate.
• C)undertake the investment because the expected rate of return of 8 percent is greater than the difference between the nominal and real interest rates.
• D)undertake the investment because the expected rate of return of 8 percent is greater than the real rate of interest.

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Definitions:

Insomnia

A common sleep disorder characterized by trouble falling asleep, staying asleep, or getting restful sleep.

Condition

A general term that describes any particular state of health, whether normal or not, affecting the body or any of its parts.

Sleep

A natural state of rest for the mind and body, during which consciousness is altered and muscle activity is inhibited.

Meta-

A prefix indicating change, transformation, or a higher level of abstraction in various scientific and philosophical fields.