Question
Given a nominal interest rate of 7% and an inflation rate of 2.5%, what is the real interest rate? A. 4.4% B. 9.5% C. 7%
Given a nominal interest rate of 7% and an inflation rate of 2.5%, what is the real interest rate?
A.
4.4%
B.
9.5%
C.
7%
D.
2.5%
E.
4.0%
Investors may be willing to invest in U.S Treasury Bills trading with a negative yield because:
A.
The risk of holding cash in a financial institution is greater than the short-term loss from the investment in T-Bill.
B.
The phenomenon indicates there is confidence that an economic upturn is imminent.
C.
Losses generated create a significant tax savings for the investor.
D.
Alternative investments with a positive yield are not available.
E.
Financial institutions are refusing to accept cash deposits from legitimate investors.
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