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The Nominal, Risk-Free Rate of Return

Question 17

Multiple Choice

The nominal, risk-free rate of return


A) Is the rate of return that both offsets inflation and provides the required real return on a riskless investment.
B) Is calculated by adding the real, risk-free rate and the inflation rate.
C) Cannot be observed directly but is often approximated by the quoted rate on U.S. or foreign government securities.
D) All of the statements above are correct.
E) Only statements a and c are correct.

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