Which of the Following Statements About Real and Nominal Interest

question 85

Multiple Choice

Which of the following statements about real and nominal interest rates is correct?

• A)Real interest rates can be either positive or negative,but nominal interest rates must be positive.
• B)Real interest rates and nominal interest rates must be positive.
• C)Real interest rates must be positive,but nominal interest rates can be either positive or negative.
• D)Real interest rates and nominal interest rates can be either positive or negative.

---

Definitions:

Payback Period

The time it takes for an investment to generate enough revenue to recover the original cost.

Annuity

An investment product offering a regular payout to a beneficiary, commonly employed to generate a steady income for those who are retired.

Net Cash Inflow

The difference between all cash receipts and all cash payments over a period of time, showing the net increase or decrease in cash.

Time Value of Money Concept

The principle that money available now is worth more than the same amount in the future due to its potential earning capacity.