A Bond Has a Nominal Rate of Return of 5

question 65

Multiple Choice

A bond has a nominal rate of return of 5.87 percent and the inflation rate is 4.13 percent.What is the approximate real rate?

• A) 1.62 percent
• B) 1.70 percent
• C) 1.74 percent
• D) 1.83 percent
• E) 1.88 percent

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Definitions:

Confidence Level

The probability that the value of a parameter falls within a specified range of values, often used in confidence intervals.

Sample Size

The total count of data points or observations gathered from a population to perform statistics.

Error of Estimation

Error of estimation is the discrepancy between an estimated value and the true value of a parameter being estimated.

Sampling Error

The error caused by observing a sample instead of the whole population, affecting the precision of statistical estimates.