The Real Rate of Interest Is

question 51

Multiple Choice

The real rate of interest is

• A)the nominal interest rate plus the inflation rate.
• B)the nominal interest rate minus the inflation rate.
• C)the interest rate determined by the supply and demand in the money market.
• D)the nominal interest rate.

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Definitions:

Unamortized Discount

The portion of a bond's issue price that is below its face value and has not yet been expensed as interest over the life of the bond.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, including the cost of servicing or carrying debt.

Bargain Purchase Option

A lease agreement term allowing the lessee to purchase the leased asset at the end of the lease term for a price significantly lower than its expected fair market value.

Lease Contract

A legal agreement in which one party permits another to use property, equipment, or facilities for a specified period in exchange for payment.