The Fisher Equation States That ________

question 103

Multiple Choice

The Fisher equation states that ________.

• A) the real interest rate equals the nominal interest rate plus the expected rate of inflation
• B) the real interest rate equals the nominal interest rate less the expected rate of inflation
• C) the nominal interest rate equals the real interest rate less the expected rate of inflation
• D) the nominal interest rate equals the real interest rate plus the expected rate of inflation

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Definitions:

Receiving Today

The concept of obtaining or expecting to obtain a certain amount or value in the present time.

Cash Flows

Refers to the net amount of cash and cash-equivalents being transferred into and out of a business.

Discounted Value

Discounted value is the present value of a future amount of money or stream of cash flows given a specified rate of return, reflecting the time value of money.

Present Value

The current worth of a future sum of money, given a specific rate of return or discount rate.