Why should investors know the difference between nominal and real interest rates?

A. to know what they are likely to lose

B. to understand changes in monetary policy

C. to guarantee an investment's profitability

D. to recognize the effects of inflation

The answer is D. A nominal interest rate is the financing cost that does not consider. It is the financing cost that is cited on bonds and advances. A real interest rate is the financing cost that takes swelling into the record. Instead of the ostensible financing cost, the genuine loan cost alters for the expansion and gives the genuine rate of a security or an advance.