Scenario: Color-Me-Green, Inc.
Color-Me-Green, Inc., a U.S.-based clothing merchant, has started doing business internationally. Having subsidiaries in several countries at year-end, the company must integrate the financial information from all its subsidiaries into the U.S. home office.
-In an attempt to raise money in country B, Color-Me-Green was quoted an interest rate of 14 percent by a local bank. This quoted rate is called the ________ rate.

Question

Quizplus · Accepted Answer

The quoted rate offered by the local bank in country B is the nominal rate. This is the stated or quoted rate of interest that does not take into account inflation or any other factors that could affect the real return on investment.

Scenario: Color-Me-Green, Inc. Color-Me-Green, Inc., a U.S.-Based Clothing Merchant, Has Started Doing Business