The real rate of return is less than the arithmetic difference between the inflation rate and the nominal rate of return.

Name: The real rate of return is less than the arithmetic difference between the inflation rate and the nominal rate of return.
Brand: Quizplus
Rating: 4.8 (53 reviews)

Question

Quizplus · Accepted Answer

The real rate of return is calculated by adjusting the nominal rate of return for inflation, typically using the formula: real rate = ((1 + nominal rate) / (1 + inflation rate)) - 1, not simply by subtracting the inflation rate from the nominal rate.

The Real Rate of Return Is Less Than the Arithmetic