Nominal Interest Rates Are the Sum of Two Major Components

question 30

Multiple Choice

Nominal interest rates are the sum of two major components.These components are ________.

• A)the real interest rate and expected inflation
• B)the risk-free rate and expected inflation
• C)the real interest rate and default premium
• D)the real interest rate and the T-bill rate

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Definitions:

Direct Write-off Method

A method of accounting for bad debts in which companies write off receivables when they determine they are uncollectible.

Days' Sales in Receivables

A financial metric that measures the average number of days it takes for a company to collect payments from its credit sales.

Aging the Receivables

The process of categorizing accounts receivable according to the length of time an invoice has been outstanding.

Due Date

The specified date by which a payment, assignment, or task is required to be completed or submitted.