The Nominal Rate of Return on the Bonds of Stu's

question 69

Multiple Choice

The nominal rate of return on the bonds of Stu's Boats is 9.75%.The real rate of return is 3.5%.What is the rate of inflation?

• A)5.97%
• B)6.04%
• C)6.21%
• D)6.43%
• E)6.49%

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Definitions:

Equivalent Interest

The equal effectiveness of different interest rates with respect to compounding periods over a specified period.

Nearest 0.01%

Rounding or approximating a numerical value to the closest one-hundredth of a percent.

Interest Rate

The percentage charged on a loan or paid on an investment for the use of money, calculated on an annual basis.

Nearest 0.01%

Rounding to the closest one-hundredth of a percent to simplify precision in calculations or representations.