What Is the Real Interest Rate If the Nominal Interest

question 33

Multiple Choice

What is the real interest rate if the nominal interest rate is 10 per cent and the expected inflation rate is 3 per cent?

• A)7%
• B)6.36%
• C)6.8%
• D)7.2%

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Definitions:

Treasury Stock

Shares that were issued and later reacquired by the issuing company, reducing the amount of stock outstanding on the open market.

Salaries Payable

The amount owed to employees for work performed that has not yet been paid at the end of a reporting period.

Salaries Expense

The total amount of salary payments made to employees, recognized as an expense on the income statement.