The actual real rate of return for lenders is equal to
A) the nominal rate of return plus the inflation rate.
B) the nominal rate of return minus the inflation rate.
C) the nominal rate of return times the inflation rate.
D) the nominal rate of return divided by the inflation rate times 100.

Question

Quizplus · Accepted Answer

The actual real rate of return for lenders is calculated by subtracting the inflation rate from the nominal rate of return. This is because inflation erodes the purchasing power of the money lent, and the lender needs to receive a rate of return that compensates for this loss.

The Actual Real Rate of Return for Lenders Is Equal