The Real Interest Rate

question 39

Multiple Choice

The real interest rate

• A) can never be negative.
• B) is approximately equal to the nominal interest rate plus the inflation rate.
• C) is approximately equal to the nominal interest rate minus the inflation rate.
• D) is positively related to the inflation rate.

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Definitions:

Stock Price

The current price at which a particular stock can be bought or sold on the stock market.

Dividend Growth Rates

The annualized percentage rate of growth of a company's dividend payments, indicating the company's dividend payout pattern over time.

Required Return

The smallest annual return rate required to attract individual or corporate investors to a particular security or venture.

Expected Dividend

The projected payment to shareholders, usually expressed as an annual amount.