Which One of the Following Statements Is Correct

question 62

Multiple Choice

Which one of the following statements is correct?

• A) The risk-free rate represents the change in purchasing power.
• B) Any return greater than the inflation rate represents the risk premium.
• C) Historical real rates of return must be positive.
• D) Nominal rates exceed real rates by the amount of the risk-free rate.
• E) The real rate must be less than the nominal rate given a positive rate of inflation.

---

Definitions:

Odd Pricing

Pricing method using uneven amounts, which sometimes appear smaller than they really are to consumers.

Penetration Pricing

A pricing strategy where a product is set at a low initial price to quickly gain market share by enticing customers away from competitors.

Breakeven Analysis

is a financial calculation that determines the point at which revenue gained equals the costs associated with receiving that revenue, indicating no net gain or loss.

Jazz Fest

A music festival focused on jazz music, featuring performances from a variety of jazz artists and bands.