When evaluating whether or not to make an investment one should focus on the _____ because doing so takes into account anticipated inflation.
A)nominal interest rate
B)exchange rate
C)real interest rate
D)junk bond rate

Question

Quizplus · Accepted Answer

The real interest rate takes into account the anticipated inflation, as it reflects the nominal interest rate adjusted for inflation. Therefore, it provides a more accurate picture of the true return on investment. The exchange rate and junk bond rate are not necessarily relevant when evaluating an investment.

When Evaluating Whether or Not to Make an Investment One