When the Real Rate of Interest Is Less Than the Nominal

question 33

Multiple Choice

When the real rate of interest is less than the nominal rate of interest,then:

• A) inflation must be added to the nominal rate.
• B) investment returns do not increase purchasing power.
• C) nominal flows should be discounted with real rates.
• D) inflation is expected to occur.

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Definitions:

Business Ethics

The principles and standards that determine acceptable conduct in business organizations.

Business Ethics

The study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, and social responsibility.

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Dodd-Frank Wall Street Reform

A comprehensive set of financial regulations passed in 2010 in response to the 2008 financial crisis, aimed at reducing risk in the financial system.