If the Nominal Interest Rate Is 8 Percent and the Rate

question 197

Multiple Choice

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent,then the real interest rate is

• A)11 percent.
• B)24 percent.
• C)5 percent.
• D)3.75 percent.

---

Definitions:

Payee

is the party in a financial transaction who receives the payment.

Maker

In the context of finance, a maker is typically a party that creates or executes an order, often in trading or banking environments.

Receivables Turnover Ratio

A financial ratio that measures how effectively a company uses its assets by comparing net credit sales with average accounts receivable.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for sales made on credit.