Which One of These Statements Is Incorrect

question 16

Multiple Choice

Which one of these statements is incorrect?

• A) Real cash flows must be discounted at a real discount rate.
• B) (1 + real rate of interest) = (1 + nominal rate of interest) / (1 + inflation rate)
• C) The actual real rate of interest almost equals "nominal rate of interest − inflation rate."
• D) Inflation rate = nominal rate / real rate − 1

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Definitions:

Accounts Receivable

Funds that customers owe to a business for products or services that have been provided but not yet compensated for.

Other Receivable

Accounts receivable that do not fit standard trade transactions, sometimes including loans to employees or advances to suppliers.

Notes Receivable

Claims against others for money, goods, or services evidenced by notes, promises to pay, or receipts.

Bad Debt Expense

An expense recognized by businesses for accounts receivable that are not expected to be collected.