The rate of return to cover a risk of investment and decrease in purchasing power, as a result of inflation is known as _________?
Correct answer: A. nominal rate of return
- A. nominal rate of return
- B. accrual accounting rate of return
- C. real rate of return
- D. required rate of return
Explanation
The nominal rate reflects the required return before removing inflation, so it includes compensation for investment risk and the loss of purchasing power caused by inflation. The real rate excludes the inflation effect.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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