If a Lender Desires to Earn a Real Return of 3

question 141

Multiple Choice

If a lender desires to earn a real return of 3 percent on a loan and the anticipated rate of inflation is 2 percent,the lender should charge a

• A)Real interest rate of 5 percent.
• B)Nominal interest rate of 5 percent.
• C)Real interest rate of 6 percent.
• D)Nominal interest rate of 3 percent.

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Definitions:

Sample Size

Refers to the number of observations or data points that are collected and used for statistical analysis.

P-values

The odds of observing test results as extreme or more extreme than the actual outcomes, under the presumption that the null hypothesis is accurate.

One-sided

Refers to a type of hypothesis test or confidence interval where the alternative hypothesis targets a specific direction of effect.

Two-sided

Pertaining to hypothesis testing, where the alternative hypothesis is not directional and considers both possibilities of the effect being greater than or less than the null hypothesis.