You Want to Make a 10% Real Return on a Loan

question 262

Multiple Choice

You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of

• A) -6%.
• B) 6%.
• C) 10%.
• D) 14%.

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Definitions:

Operations Function

Refers to the area within an organization that is responsible for producing goods or delivering services efficiently and effectively.