If the Nominal Interest Rate Is 0

question 3

Multiple Choice

If the nominal interest rate is 0.6 percent and the rate of inflation is 2.9 percent in a given year,then what is the corresponding real rate of return?

• A)3.5 percent
• B)2.3 percent
• C)-3.5 percent
• D)None of the above.

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Definitions:

Installment Note

A loan that requires regular payments, or installments, over a set period of time, until the principal and interest are paid in full.

Annual Payments

Regular payments made once a year, often associated with loans, annuities, or insurance policies.

Carrying Amount

The book value of an asset or liability on a company’s balance sheet, considering factors like depreciation or amortization.

Quick Ratio

A liquidity metric that measures a company's ability to cover its short-term obligations with its most liquid assets excluding inventory.