Which of the Following Is True of the Real Risk-Free

question 48

Multiple Choice

Which of the following is true of the real risk-free rate of interest?

• A)Most experts think that the real risk-free rate fluctuates in the range of 15 to 20 percent in the United States.
• B)The real risk-free rate must include a component for the average inflation.
• C)The real risk-free rate is the sum of nominal rate of interest and the average inflation rate.
• D)It is easy to measure the real risk-free rate precisely.
• E)It is the rate of interest that would exist on default-free U.S. Treasury securities if no inflation were expected in the future.