You want to earn a real rate of return of 3.75% at a time when the inflation rate is 2.33%. What is the approximate nominal rate that you must earn?
A)5.78%
B)5.96%
C)6.08%
D)6.14%
E)6.28%

Question

Quizplus · Accepted Answer

The nominal rate can be calculated using the formula: (1 + nominal rate) = (1 + real rate) * (1 + inflation rate). Solving for the nominal rate gives approximately 6.08%.

You Want to Earn a Real Rate of Return of 3.75