Ask Question
BusinessBusiness
19 October, 01:57

The difference between the nominal interest rate and the real interest rate is

A. the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate.

B. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate divided by the inflation rate.

C. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate plus the inflation rate.

D. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.

+5
Answers (2)
  1. 19 October, 04:38
    0
    D. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.

    Explanation:

    The nominal interest rate is that interest rate that is advertised by the financial institutions either as interest on loan or deposit. Since it is the interest rate stated in financial instruments like the ones quoted on bonds, it is also seen as the stated interest rate.

    The real interest rate is the interest rate which has been adjusted to remove the effect of inflation. That is, to get the real interest rate, take the nominal interest rate and subtract the inflation rate. therefore, we can use the following formula.

    Real Interest Rate = Nominal Interest Rate - Inflation Rate.

    In fact the real interest rate can be sen as the real cost of borrowing money.
  2. 19 October, 05:09
    0
    Answer: the correct answer is letter D. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.

    Explanation: in financial maths when you speak about "real" rates you should consider the inflation impact.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The difference between the nominal interest rate and the real interest rate is A. the real interest rate is the stated interest rate ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
All insurance is based on a principle called A. premium earnings. B. cash value coverage. C. investment premiums. D. division of risk.
Answers (1)
In 1776, an economics book titled - BLANK - was published to promote the concept of free enterprise.
Answers (1)
Companies usually prefer hiring third-country nationals for filling positions in host-countries. True False
Answers (1)
Division A sells ground veal internally to Division B, which in turn, produces veal burgers that sell for $ 20.00 per pound. Division A incurs costs of $ 2.25 per pound while Division B incurs additional costs of $ 8.50 per pound.
Answers (1)
American employees of Ujima Corp. learned that they should avoid using their left hand when giving a gift or handing out money when they were in India for their business assignment.
Answers (1)
New Questions in Business
During the year, a company had the cash flows listed below. What was the total net cash flow for the year?
Answers (1)
The following transactions occurred during the first year of operations for Cougar Corp. for each transaction prepare the year-end adjusting journal entry. Note: these ARE adjusting entries. a. Cougar Corp.
Answers (1)
Given the following information for a one-year project, answer the following questions. Recall that PV is the planned value, EV is the earned value, AC is the actual cost, and BAC is the budget at completion.
Answers (1)
Preferred Stock, 7%, $115 par $1,170,000 Common Stock, $1.50 par 300,000 Paid in capital in excess of par, common stock 1,200,000 Retained earnings 2.500.
Answers (1)
On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The company is depreciating the equipment at the rate of $500 per month. The book value of the equipment at December 31, 2013 is:A) $0. B) $6,000. C) $30,000. D) $36,000.
Answers (1)
Home » Business » The difference between the nominal interest rate and the real interest rate is A. the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate. B.
Sign Up Forgot Password?