Approximately, the Real Interest Rate ________ the Inflation Rate ________

question 41

Multiple Choice

Approximately, the real interest rate ________ the inflation rate ________ the nominal interest rate.

• A)plus; equals
• B)equals; plus
• C)equals; minus
• D)minus; equals
• E)times; divided by 100 equals

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Definitions:

Average Rate of Return

A financial ratio that indicates the profitability of an investment by calculating the average annual profits divided by the initial investment cost.

Present Value Factor

A factor used to determine the present value of a sum that is to be received in the future, taking into account a specific interest rate and time period.

Cash Payback Period

The amount of time it takes for an investment to generate enough cash flow to recover its initial cost.

Present Value Factor

A factor used in calculating the present value of a future cash flow, discounting its value to reflect time and risk.