Which of the Following Statements Regarding Real and Nominal Interest

question 16

Multiple Choice

Which of the following statements regarding real and nominal interest rates is true?

• A)Although real interest rates may be either positive or negative, nominal interest rates will always be positive.
• B)Although nominal interest rates may be either positive or negative, real interest rates will always be positive.
• C)If a security has a positive nominal return, then its real return will also be positive.
• D)Both real and nominal interest rates may be either positive or negative.

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Definitions:

Sample Size

The number of observations or data points collected or selected from a population for the purpose of statistical analysis.

Degrees of Freedom

The number of independent pieces of information in a dataset that are available for estimating another piece of information or parameter.

Confidence Interval

A band of values, derived from the statistical examination of samples, presumed to include the value of an unascertained population parameter.

T-Distribution

A probability distribution used in statistics that is applicable when the sample size is small and the population variance is unknown.