If a Lender Wants a Real Return of 6 Per

question 22

Multiple Choice

If a lender wants a real return of 6 per cent and she expects inflation to be 4 per cent, which of the following is the nominal interest rate to charge?

• A) 4 per cent
• B) 6 per cent
• C) 2 per cent
• D) 10 per cent

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Definitions:

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, indicating how spread out the data points are.

Mean Purchase

The average amount of purchases made over a certain period of time or across individuals.

Probability

The expression of an event's likelihood as a number from 0 to 1.

Standard Error

A measure that quantifies the variation or dispersion of sample means relative to the true population mean.