The increase you realize in buying power as a result of owning a bond is referred to as the ________ rate of return.

Question

Quizplus · Accepted Answer

The increase in buying power resulting from owning a bond is referred to as the real rate of return because it takes inflation into account. The nominal rate of return does not consider inflation, while the market rate of return refers to the rate of return that investors demand for a particular investment. The term "inflated rate of return" is not commonly used in finance, and risk-free rate of return is a separate concept that refers to the rate of return on a risk-free investment like a Treasury bill.

The Increase You Realize in Buying Power as a Result