The XYZ Corporation Determines It Can Make a Real (Inflation-Adjusted)return

question 182

Multiple Choice

The XYZ Corporation determines it can make a real (inflation-adjusted) return on an investment of 9 percent. The nominal rate of interest is 13 percent and the rate of inflation is 7 percent. We can conclude that the

• A)investment will be profitable.
• B)investment will be unprofitable.
• C)real rate of interest is 4 percent.
• D)real rate of interest is 2 percent.