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 due to owning a bond is referred to as real rate of return because it takes inflation into account. Nominal rate of return does not consider the impact of inflation on buying power, so option C is incorrect. Option B (realized) and option D (inflated) are not commonly used terms in finance for describing rate of return. Option E (risk-free) is not relevant to the given context.

The Increase You Realize in Buying Power as a Result