Asked by Abbas Ghaderi on Jun 25, 2024
Verified
The rate of return on a bond which reflects the increase in buying power achieved by the bond holder is called the _____ rate of return.
A) Inflated.
B) Nominal.
C) Adjusted.
D) Real.
E) compounded
Real Rate
The inflation-adjusted interest rate, representing the actual cost of borrowing or the genuine return on an investment.
Buying Power
The amount of goods or services that can be purchased with a unit of currency or by consumers, reflecting the value of money.
- Understand the various risk premiums associated with bond investing.
Verified Answer
CG
Charles GriswoldJun 27, 2024
Final Answer :
D
Explanation :
The real rate of return on a bond reflects the increase in buying power achieved by the bond holder, as it takes into account the effects of inflation on the investment's returns.
Learning Objectives
- Understand the various risk premiums associated with bond investing.
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