The Difference Between the Nominal Interest Rate and the Real

question 92

Multiple Choice

The difference between the nominal interest rate and the real interest rate is the

• A) inflation rate.
• B) unemployment rate.
• C) GDP growth rate.
• D) money growth rate minus the growth rate of real GDP.
• E) price level.

Evaluate investment opportunities using present value and future value concepts.

Understand and calculate the effective annual rate (EAR) for mortgages and loans.

Understand the concept of time value of money and its applications.

Calculate the present value and future value of annuities, both ordinary and due.

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