Which one of these statements is incorrect?
A) Real cash flows must be discounted at a real discount rate.
B) (1 + real rate of interest) = (1 + nominal rate of interest)/(1 + inflation rate)
C) The actual real rate of interest almost equals "nominal rate of interest - inflation rate."
D)Inflation rate = Nominal rate/Real rate - 1

Question

Quizplus · Accepted Answer

The correct formula is:
Inflation rate = (1 + nominal rate)/(1 + real rate) - 1.

Which One of These Statements Is Incorrect