Q554
Rate denoted as r* is best classified as
A.
real risk-free interest rate
AnswerB.
real-risk free nominal rate
C.
real-risk free quoted rate
D.
real-risk free nominal premium
Answer: Option A
Solution
Answer: Option A
Solution:
Rate denoted as r* is best classified as real risk-free interest rate. The Risk-Free Rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk.