The Appropriate Discount Rate That Analysts Use in Computing the Present

question 52

Multiple Choice

The appropriate discount rate that analysts use in computing the present value of future cash flows is composed of a pure interest rate and a premium for the risk of the investment,but no increase to reflect expected inflation.What is this rate called?

• A)risk-free rate.
• B)real interest rate.
• C)nominal interest rate.
• D)none of the above.

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