The correct answer is A. real risk-free interest rate.
The real risk-free interest rate is the interest rate that would be earned on a risk-free investment if there was no inflation. It is calculated by subtracting the expected rate of inflation from the nominal interest rate.
The nominal interest rate is the interest rate that is actually paid on an investment. It includes the real interest rate plus an inflation premium. The inflation premium is the amount of interest that is paid to compensate for the expected loss of purchasing power due to inflation.
The real risk-free interest rate is important because it is used to calculate the present value of future cash flows. It is also used to calculate the real rate of return on an investment.
The other options are incorrect because they do not accurately reflect the meaning of the term “real risk-free interest rate.”
Option B, real-risk free nominal rate, is incorrect because it includes the inflation premium. The inflation premium is not a risk-free component of the interest rate.
Option C, real-risk free quoted rate, is incorrect because it is not a rate that is actually paid on an investment. The quoted rate is the nominal interest rate that is advertised by a lender.
Option D, real-risk free nominal premium, is incorrect because it is not a component of the interest rate. The nominal interest rate is the sum of the real interest rate and the inflation premium.