The Western Division of Bestboot Company Has a Rate of Return

question 193

Multiple Choice

The Western Division of Bestboot Company has a rate of return on investment of 15% and an investment turnover of 1.2. What is the profit margin?

• A) 10%
• B) 12.5%
• C) 9%
• D) 6%

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Definitions:

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, representing the true cost of borrowing and the true yield on investing.

Nominal Interest Rate

The interest rate before adjustments for inflation; the stated or face interest rate on a loan or investment.

Real Rate of Interest

Real Rate of Interest is the interest rate that has been adjusted to remove the effects of inflation, providing a more accurate measure of the cost of borrowing.