A Nominal Interest Rate Is Normally Composed of Following Elements

question 68

Multiple Choice

A nominal interest rate is normally composed of following elements

• A) real interest rate, expected inflation rate and risk premium.
• B) real interest rate and risk premium.
• C) periodic interest rate, real interest rate and expected inflation rate.
• D) periodic interest rate, expected inflation rate and risk premium.

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Definitions:

Statement of Financial Position

A financial statement that details a company's assets, liabilities, and shareholders' equity at a specific point in time.

Cash Basis

An accounting method where revenues and expenses are recognized when cash is received or paid, as opposed to when they are incurred.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations and external investment sources.