The amount of interest paid on a debt security in dollar terms as a percent of the principal is referred to as the
A)expected real interest rate.
B)realized real interest rate.
C)after-tax real interest rate.
D)nominal interest rate.

Question

Quizplus · Accepted Answer

The amount of interest paid on a debt security in dollar terms as a percent of the principal is referred to as the nominal interest rate. The other options are not applicable in this context. The expected real interest rate takes into account inflation, the realized real interest rate considers the actual return after adjusting for inflation, and the after-tax real interest rate factors in the effect of taxes on the return.

The Amount of Interest Paid on a Debt Security in Dollar