If the current inflation rate is 4% and you have an investment opportunity that pays 10%, then the real rate of interest on your investment is closest to:
A) 10.0%
B) 14.0%
C) 6.0%
D) 5.8%

Multiple Choice

Related questions

Q 45

If the current inflation rate is 5%, then the nominal rate necessary for you to earn an 8% real interest rate on your investment is closest to:
A) 13.0%
B) 13.4%
C) 4.9%
D) 3.0%

Q 47

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:
-What is the shape of the yield curve and what expectations are investors likely to have about future interest rates?
A) Inverted; Higher
B) Normal; Higher
C) Inverted; Lower
D) Normal; Lower

Q 48

Use the table for the question(s) below.
Suppose the term structure of interest rates is shown below:
-The present value of receiving $1000 per year with certainty at the end of the next three years is closest to:
A) $2,737
B) $2,723
C) $2,733
D) $2,744