Assume a Bond Yields a Real Rate of Return of 3.6

question 16

Multiple Choice

Assume a bond yields a real rate of return of 3.6 percent during a time when inflation is 1.87 percent.What would the actual nominal rate of return be?

• A)5.61%
• B)5.46%
• C)5.49%
• D)5.54%
• E)5.57%

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Definitions:

Sunk Costs

Costs that have already been incurred as a result of past decisions. They are sometimes referred to as historical costs.

Variable Costs

Expenses that fluctuate in direct proportion to the level of output or production activity.

Stock Purchase

The action of buying shares in a company, which represents a portion of ownership in that corporation.

Government Regulations

Rules established by government aimed at influencing economic activity and protecting consumers, workers, and the environment.