If the Nominal Interest Rate Is 10 Per Cent and the Rate

question 30

Multiple Choice

If the nominal interest rate is 10 per cent and the rate of inflation is 15 per cent, the real interest rate is:

• A)five per cent
• B)25 per cent
• C)minus five per cent
• D)150 per cent

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Definitions:

Collection Delay

The period between when a company bills its customer and when it actually receives payment, impacting cash flow.

Average Daily Float

The average amount of uncollected funds in a company's checking account, representing checks written against and deposited in the account but not yet cleared.