Given a Nominal Interest Rate of 6 Percent,in Which of the Following

question 69

Multiple Choice

Given a nominal interest rate of 6 percent,in which of the following cases would you earn the lowest after-tax real rate of interest?

• A)Inflation is 4 percent;the tax rate is 5 percent.
• B)Inflation is 3 percent;the tax rate is 20 percent.
• C)Inflation is 2 percent;the tax rate is 30 percent.
• D)The after-tax real interest rate is the same for all of the above.

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Definitions:

Commitment

The state or quality of being dedicated to a cause, activity, or undertaking.

Standard Of Care

The degree of attentiveness, caution, and prudence that a reasonable person would reasonably be expected to do in similar circumstances.

Test

A method or procedure used to assess the presence, quality, or performance of something.

Punitive Damages

Punitive damages are compensation awarded in a lawsuit as a punishment to the defendant for egregious wrongdoing and as a deterrent against future similar actions.