When real rate is high, all the interest rates tend to be ___________?
Correct answer: A. Higher
- A. Higher
- B. Lower
- C. Constant
- D. None of These
Explanation
The real interest rate is a major base component of nominal interest rates, so a higher real rate generally pushes other interest rates higher, assuming other factors remain unchanged.
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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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