Over the Past Year You Earned a Nominal Rate of Interest

question 1

Multiple Choice

Over the past year you earned a nominal rate of interest of 8 percent on your money.The inflation rate was 4 percent over the same period.The exact actual growth rate of your purchasing power was

• A)15.5%.
• B)10.0%.
• C)3.8%.
• D)4.8%.
• E)15.0%.

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Definitions:

Variance

A measure of the dispersion of a set of values, calculated as the average of the squared deviations from the mean.

Observations

The instances or data points collected or recorded for the purpose of analysis.

Coefficient of Variation

A standardized measure of the dispersion of a probability distribution or frequency distribution.

Weights

Quantitative values assigned to elements of a set as a measure of their importance or influence in statistical calculations.