If His Savings Account Had Earned a More Conservative 9

question 80

Multiple Choice

If his savings account had earned a more conservative 9% annual rate of return,Arnold's savings would be approximately ________ less by age 68.

• A)$4,132
• B)$62,585
• C)$167,805
• D)$1,871,663

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Definitions:

Real Rate of Interest

The interest rate that has been adjusted to remove the effects of inflation; reflects the true cost of borrowing.

Nominal Rate

The rate of interest before adjustments for inflation, representing the face value rate agreed upon in financial instruments and agreements.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Expected Holding-Period Return

The total return anticipated on an investment over the period it is held, including income and price appreciation.