If the Nominal Interest Rate Is 20% Per Year,how Much

question 55

Multiple Choice

If the nominal interest rate is 20% per year,how much money can an individual borrow today if she wants to repay $100 in one year?

• A)$80.00
• B)$83.33
• C)$120.00
• D)$78.00
• E) $121.00

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Definitions:

Diversify

To invest in a variety of assets to reduce risk in an investment portfolio.

Stand-Alone Risk

The risk associated with a single operating asset or investment, without considering other risks in a portfolio or company.

Risk Impacts

The potential negative consequences or losses arising from uncertainties and vulnerabilities within a system or investment.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual, exchange-traded, and closed funds.