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Which of the Following Statements Is Correct

Question 13

Multiple Choice

Which of the following statements is correct?


A) The nominal risk-free rate compensates investors for postponing consumption, inflation, and risk.
B) The nominal risk-free rate offsets inflation and provides the required real return on a riskless investment.
C) The nominal risk-free rate is correctly calculated as the required real rate plus the expected inflation rate.
D) The inflation premium is calculated as the required real rate multiplied by the expected inflation rate.
E) Another name for the quoted (or stated) rate is the required real rate.

Correct Answer:

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