The factors that can affect nominal interest rates in financial transactions include _________?
Correct answer: D. all of the aboveHire An Accountant
- A. special provisions
- B. liquidity and default risk
- C. inflation and real interest arte
- D. all of the aboveHire An Accountant
Explanation
Nominal interest rates reflect the real rate plus expected inflation, and are also affected by liquidity, default risk, and contractual provisions. Therefore, all the listed factors may influence the rate.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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