Tony Lent Dave $1,000 for One Year with the Understanding

question 26

Multiple Choice

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070.If the actual inflation rate was 7 percent,what was the real rate of interest Tony received?

• A)14 percent
• B)7 percent
• C)4 percent
• D)0 percent
• E)-7 percent

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Definitions:

Coefficient Of Determination

A statistic used in the context of predictive models that represents the proportion of variance in the dependent variable predictable from the independent variable(s), usually denoted as R².

Variation

The measure of the spread or distribution of a set of data points.

Standard Error Of Estimate

A measure that indicates the accuracy of predictions made in a regression analysis; it reflects the typical distance between observed and predicted values.

Coefficient Of Correlation

An analytical measure that identifies the strength and directionality of a linear relationship involving two factors.