A Year Ago,you Invested $2,500 in a Savings Account That

question 70

Multiple Choice

A year ago,you invested $2,500 in a savings account that pays an annual interest rate of 2.5%.What is your approximate annual real rate of return if the rate of inflation was 3.4% over the year?

• A)0.9%.
• B)-0.9%.
• C)5.9%.
• D)3.4%.
• E)none of the above.

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Definitions:

Corporation

A legal entity separate from its shareholders, with its own rights, privileges, and liabilities.

Business Entity

An organization established as a separate legal entity for business purposes, which may include corporations, partnerships, and sole proprietorships.

Accounting Purposes

The reason or rationale for recording financial transactions and maintaining financial records, mostly to provide insight into a business’s financial health, comply with legal obligations, and inform decision-making.

Proprietorship

A business entity owned and operated by a single individual, with no legal distinction between the owner and the business.