If the Nominal Interest Rate Is 8 Percent and Inflation

question 34

Multiple Choice

If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate?

• A) 11 percent
• B) 8 percent
• C) 5 percent
• D) 3 percent

---

Definitions:

Dividend Increase

A rise in the amount of money paid to shareholders out of a company's earnings per share.

Annual Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits on a yearly basis.

Dividends Increase

An action by a company to increase the amount of dividends paid to shareholders, typically signaling confidence in the company's profitability.

Rate of Return

The success or failure of an investment over a determined timeframe, depicted as a percentage of the investment’s original stake.