An essentially risk free, long term interest rate which is free of the influence of market imperfections?
Correct answer: C. Pure rate of interest
- A. Nominal rate of interest
- B. Economic rate of interest
- C. Pure rate of interest
- D. None
Explanation
The pure rate of interest is the basic risk-free, long-term interest rate before adjustments for risk, inflation, or market imperfections. A nominal interest rate may include inflation and other influences.
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