The real rate of return on a stock is approximately equal to the nominal rate of return:
A) Multiplied by (1 + inflation rate).
B) Plus the inflation rate.
C) Minus the inflation rate.
D) Divided by (1 + inflation rate).
E) Divided by (1 - inflation rate).

Question

Quizplus · Accepted Answer

The real rate of return is calculated by adjusting the nominal rate of return for inflation, which is done by subtracting the inflation rate from the nominal rate.

The Real Rate of Return on a Stock Is Approximately