Which of the Following Statement(s) Is(are) True

question 73

Multiple Choice

Which of the following statement(s) is(are) true?

• A) Inflation has no effect on the nominal rate of interest.
• B) The realized nominal rate of interest is always greater than the real rate of interest.
• C) Certificates of deposit offer a guaranteed real rate of interest.
• D) None of the options are true.

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Definitions:

Yield

Yield refers to the earnings generated and realized on an investment over a particular period, expressed as a percentage based on the investment's cost, current market value, or face value.

Face Value

The original value of a financial instrument as stated on the instrument itself, such as the principal value of a bond or the value printed on a stock certificate.

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments but are issued at a deep discount and redeemable for their face value at maturity.

Market Rate

The typical or prevailing interest rate available in the market for financial instruments or loans.