It is not possible for the nominal risk-free rate of return to be lower than the rate of inflation.

Name: It is not possible for the nominal risk-free rate of return to be lower than the rate of inflation.
Brand: Quizplus
Rating: 4.8 (38 reviews)

Question

Quizplus · Accepted Answer

The nominal risk-free rate of return can indeed be lower than the rate of inflation. This situation is known as negative real interest rates, where the purchasing power of the invested capital decreases over time when inflation is accounted for.

It Is Not Possible for the Nominal Risk-Free Rate of Return