Which of the Following Describes the Interest Rate in Addition

question 79

Multiple Choice

Which of the following describes the interest rate in addition to the inflation rate expected on a risk-free loan?

• A)real rate
• B)nominal rate
• C)risk-free rate
• D)prime rate

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Definitions:

Cash Flow

The net amount of cash and cash equivalents being transferred into and out of a business.

Par Value

The face value of a bond, stock, or coupon as stated by the issuer, which is the minimum amount at which the security can be sold.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, typically with dividends that are paid out before dividends to common shareholders.

No-par Common Stock

No-par common stock is issued without a par value, and its value is determined by what investors are willing to pay for it, rather than being stated in the company's charter.