A Bond Has a Nominal Rate of Return of 5

question 31

Multiple Choice

A bond has a nominal rate of return of 5.87% and the inflation rate is 4.13%. What is the approximate real rate?

• A)1.62%
• B)1.70%
• C)1.74%
• D)1.83%
• E)1.88%

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Definitions:

Variable Cost

Expenses that change in proportion to the amount of goods produced or sold, including items like labor and materials.

Markup Percentage

Markup Percentage is the ratio of the difference between the selling price and the cost of a product to the cost itself, expressed as a percentage, indicating how much is added to the cost to determine the selling price.

Variable Cost

Costs that change in proportion to the level of production or activity in a business.

Variable Cost Method

A pricing strategy in which the price is based on the variable costs of producing a good or service, not including fixed costs.