The nominal rate of return on a bond is 7.28 percent while the real rate is 3.09 percent.What is the rate of inflation?
A)4.06 percent
B)4.28 percent
C)4.09 percent
D)4.13 percent
E)4.17 percent

Question

Quizplus · Accepted Answer

The rate of inflation is the difference between the nominal rate of return and the real rate of return. In this case, the nominal rate of return is 7.28 percent and the real rate of return is 3.09 percent, so the rate of inflation is 7.28 percent - 3.09 percent = 4.06 percent.

The Nominal Rate of Return on a Bond Is 7