Which of the following statements is correct?
A)real cash flows must be discounted at a real discount rate
B)nominal cash flows must be discounted at a nominal rate
C)(1 + real rate of interest) = (1 + nominal rate of interest)/(1 + inflation rate)
D)all statements are correct

Question

Quizplus · Accepted Answer

All statements are correct. A) and B) are basic principles of finance, ensuring consistency between the type of cash flows and the discount rate used. C) is the Fisher equation, which relates real and nominal interest rates through inflation.

Which of the Following Statements Is Correct