The real rate of return is the amount of interest earned over and above the?

By Investopedia AAA
A:

The real rate of return is the amount of interest earned over and above the:
a. discount rate.

b. tax rate.

c. inflation rate.

d. risk-free rate of return.



The correct answer is "c", since the real rate of return measures the investor's rate of return in excess of the inflation rate.



RELATED FAQS

  1. What are some of the most common mutual funds that give exposure to the Internet ...

    Learn about some of the most popular and best performing mutual funds that investors utilize to invest in Internet-related ...
  2. How do banks measure the Five Cs of Credit?

    Learn about the five C's of credit and what qualitative and quantitative methods banks use to measure them when evaluating ...
  3. How do drawdowns help assess investment risk?

    Learn how the concepts of drawdowns and maximum drawdowns are used in the analysis of risk, as well as in the building of ...
  4. How do I find out my own risk tolerance?

    Learn why risking capital can be risky business, how much risk can you afford and how to determine the right amount of risk ...
RELATED TERMS
  1. Risk Financing

    The determination of how an organization will pay for loss events ...
  2. Captive Value Added (CVA)

    The financial benefit that an organization would gain by using ...
  3. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  4. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  5. Bornhuetter-Ferguson Technique

    A method for calculating an estimate of an insurance company’s ...
  6. Average Severity

    The amount of loss associated with an average insurance claim. ...

You May Also Like

Related Articles
  1. Bonds & Fixed Income

    A Look at the Pros and Cons of Muni ...

  2. Bonds & Fixed Income

    How to Diversify with Muni Bond ETFs

  3. Investing Basics

    What are examples of popular companies ...

  4. Technical Indicators

    Strategies To Trade Volatility Effectively ...

  5. Fundamental Analysis

    How Investment Risk Is Quantified

Trading Center