Why Is It Fairly Easy to Fall into the Trap

question 116

Multiple Choice

Why is it fairly easy to fall into the trap of discounting real cash flows with nominal rates?

• A) It is difficult to determine real discount rates.
• B) Increases in nominal cash flows are often not forecast.
• C) Inflation does not impact cash flows, but it does impact discount rates.
• D) Increases in revenues are offset by increases in costs.

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Definitions:

Do...While Loop

A control flow statement in programming that repeatedly executes a block of code at least once and then repeats as long as a specified condition remains true.

Pretest Loop

A pretest loop is a control structure that tests its condition before the body of the loop is executed, ensuring that the loop body may not run at all if the condition is not met initially.

Logical Expression

A statement that evaluates to true or false, often used in conditions and decision making.