In the Phrase "Nominal Risk-Free Rate," Nominal Means

question 63

Multiple Choice

In the phrase "nominal risk-free rate," nominal means

• A) computed.
• B) historical.
• C) market.
• D) average.
• E) risk adverse.

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Definitions:

Certificate of Deposit

A savings certificate with a fixed maturity date, specified fixed interest rate, and can be issued in any denomination aside from minimum investment requirements.

Principal

The main party to a transaction, contract, or financial instrument, or the amount of a debt or investment before interest.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the principal, or the profit earned on savings and investments.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee able to transfer it to another holder.