MrX Invests $1,000 at a 10% Nominal Rate for One

question 3

Multiple Choice

Mr.X invests $1,000 at a 10% nominal rate for one year.If the inflation rate is 4%,what is the real value of the investment at the end of one year?

• A)$1,100
• B)$1,000
• C)$1,058
• D)$1,040

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Definitions:

Economic Climate

The overall state of the economic environment, characterized by factors such as growth rates, unemployment, inflation, and consumer confidence.

Conditions

Conditions include the specific requirements, terms, or situations that affect or determine the operation of agreements, policies, or actions.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the loan amount.

Borrowed Funds

Money obtained through loans or credits that must be repaid over time, with interest, used for financing various activities or purchasing assets.