What Has Been the Average Annual Real Rate of Interest

question 45

Multiple Choice

What has been the average annual real rate of interest on Treasury bills over the past 114 years (from 1900 to 2014) ?

• A)Less than 2 percent
• B)Between 2 percent and 3 percent
• C)Between 3 percent and 4 percent
• D)Greater than 4 percent

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Definitions:

Face Value

The nominal value or dollar value of a security stated by the issuer.

Contract Rate

The agreed-upon interest rate specified in a contract, often related to loans or financial agreements.

Market Rate

The prevailing rate of interest available on investments or the average cost of borrowing money in the market.

Issued

The process of making securities available for sale to the public or the amount of a product or securities distributed to the public.