If the Market Interest Rate Is 10% and the Inflation

question 110

Multiple Choice

If the market interest rate is 10% and the inflation rate is 3%,then the real interest rate equals

• A) 3%.
• B) 7%.
• C) 10%.
• D) 13%.
• E) 30%.

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Definitions:

Daily Closing Balance

The total amount in an account at the end of each day, taking into account all transactions and activities of that day.

Bank Account

A financial account maintained by a bank or other financial institution in which the financial transactions between a customer and the bank are recorded.

Discounted

A reduction applied to the price of goods, services, or securities, or the process of calculating the present value of a series of future cash flows.

Simple Interest

Interest calculated only on the initial principal of an investment or loan over a specified time period.