If a Lender Wants to Earn a Real Interest Rate

question 108

Multiple Choice

If a lender wants to earn a real interest rate of 3% and expects inflation to be 3%, he/she should charge a nominal interest rate that:

• A) is at least 7%.
• B) is anything above 0%.
• C) equals the real rate desired plus expected inflation.
• D) equals the real rate desired less expected inflation.

---

Definitions:

Behaviors

The actions or reactions of a person or animal in response to external or internal stimuli.

Principled Negotiation

A negotiation strategy that focuses on mutual interests rather than positions, aiming for outcomes that benefit all parties.

Objective Criteria

Objective criteria are unbiased standards used to measure or evaluate something.

Subjective Criteria

Standards or principles based on personal feelings, tastes, or opinions rather than objective measures.