A Bond Yielded a Real Rate of Return of 3

question 92

Multiple Choice

A bond yielded a real rate of return of 3.87 percent for a time period when the inflation rate was 3.75 percent.What was the actual nominal rate of return?

• A)87.58 percent
• B)7.62 percent
• C)7.77 percent
• D)8.28 percent
• E).36 percent

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Definitions:

Warranty Repairs

Services provided to repair or fix products free of charge under a warranty agreement, considered a contingent liability when the product is sold.

Parts Inventory

The stock of components or parts kept on hand by a company to assemble products or perform service maintenance.

Note Payable

A written agreement where one party promises to pay another party a specific sum of money at a determined future date or on demand.

Interest Expense

The cost accrued on borrowed funds, reflected as a financial charge for the use of the lender's money.