Real rate = risk-free rate + business-risk rate.

Name: Real rate = risk-free rate + business-risk rate.
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Question

Quizplus · Accepted Answer

This is the correct formula for calculating the real rate of return. The real rate of return is the return on an investment adjusted for inflation, and it consists of the risk-free rate (the rate of return on a riskless investment) plus the business-risk rate (the additional return required to compensate for the risk of a particular investment).

Real Rate = Risk-Free Rate + Business-Risk Rate