Q894
Real rate of return, risk and expected inflation are primary determinants of
A.
minimum rate of return
AnswerB.
accepted return
C.
expected return
D.
real risk free rate
Answer: Option A
Solution
Answer: Option A
Solution:
Real rate of return, risk and expected inflation are primary determinants of minimum rate of return. The required rate of return is the minimum return an investor expects to achieve by investing in a project. An investor typically sets the required rate of return by adding a risk premium to the interest percentage that could be gained by investing excess funds in a risk-free investment.