The Nichols Company borrowed $32,000 from the bank and agreed to keep $3000 on deposit at all times. The stated rate of interest on the loan is 9%. What is the real rate of interest?
A)9%
B)9.4%
C)9.9%
D)10.3%

Question

Quizplus · Accepted Answer

The real rate of interest is the stated rate of interest minus the inflation rate. In this case, the inflation rate is not given, so we cannot calculate the real rate of interest. However, we can say that the real rate of interest is less than 9%.

The Nichols Company Borrowed $32,000 from the Bank and Agreed