What Is the Minimum Nominal Rate of Return That You

question 24

Multiple Choice

What is the minimum nominal rate of return that you should accept if you require a 4% real rate of return and the rate of inflation is expected to average 3.5% during the investment period?

• A) 7.36%
• B) 7.50%
• C) 7.64%
• D) 8.01%

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Definitions:

Proprietorship

A form of business organization owned by a single individual who is responsible for its debts and entitled to its profits.

Personal Tax Rate

The percentage at which an individual's income is taxed by the government.

Limited Liability

A legal structure that limits the financial liability of company owners to the amount they have invested in the company.

Debt Instrument

A paper or electronic obligation that enables the issuing party to raise funds by promising to repay a lender in accordance with terms of a contract.