If nominal rate of return on investment is 6% and inflation is 2% over a holding period,what is the real rate of return on this investment?
A) 3.92%
B) 4.00%
C) 4.12%
D) 6.00%

Question

Quizplus · Accepted Answer

The real rate of return is calculated using the formula: (1 + nominal rate) / (1 + inflation rate) - 1. Plugging in the values: (1 + 0.06) / (1 + 0.02) - 1 = 0.0392 or 3.92%.

If Nominal Rate of Return on Investment Is 6% and Inflation