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. How does duration impact bond funds?

    Learn how duration for a bond fund measures the risk the bond portfolio has to a rise in interest rates, and see how managers ...
  2. What percent of capital should banks hold relative to its risk weighted assets?

    Learn what percentage of capital banks must hold under the capital adequacy ratio as set forth in Basel III, and understand ...
  3. How are risk weighted assets used to calculate the solvency ratio in regulatory capital ...

    Learn how risk-weighted assets are used to determine solvency ratio requirements under the Basel III accord, and see how ...
  4. What is a "linear" exposure in Value at Risk (VaR) calculation?

    Learn how the value-at-risk (VaR) calculation is used for portfolios with linear risk as opposed to nonlinear risk, and understand ...
RELATED TERMS
  1. Maximum Drawdown (MDD)

    The maximum loss from a peak to a trough of a portfolio, before ...
  2. Gross Exposure

    The absolute level of a fund's investments.
  3. Priori Loss Estimates

    A technique used by insurance companies to calculate loss reserves.
  4. Value Of Risk (VOR)

    The financial benefit that a risk-taking activity will bring ...
  5. Risk Financing

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

    The financial benefit that an organization would gain by using ...

You May Also Like

Related Articles
  1. Trading Strategies

    What To Do With Stocks That Hit All-Time ...

  2. Trading Strategies

    Understanding The Price Vs. Time Equation

  3. Mutual Funds & ETFs

    Top Commodities ETFs for Your Retirement ...

  4. Savings

    Investing: How to Make Fast Money in ...

  5. Chart Advisor

    3 Commodity Stocks Poised For A Move ...

Trading Center