The Nominal Interest Rate Approximately Equals Which of the Following

question 204

Multiple Choice

The nominal interest rate approximately equals which of the following?

• A) the real interest rate minus the inflation rate
• B) the real interest rate plus the inflation rate
• C) the real interest rate minus the growth rate of real GDP
• D) the real interest rate plus the growth rate of real GDP

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Definitions:

NPV

An alternative measure for Net Present Value, reflecting the difference in the present value of cash inflows and outflows over a period of time.

Required Rate

The minimum return that investors expect to earn from their investment, essentially setting a benchmark for the performance of an investment.

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.

Rotating Magnetic Field

A magnetic field that rotates in space within electrical machinery, used to generate rotating mechanical force.