You have $5,000 in a 36 month Certificate of Deposit that has an APR of 3.75%.If inflation averages 4.25% during these 36 months,what is the real return on your CD?

Question

Quizplus · Accepted Answer

To calculate the real return on the CD, we need to subtract the inflation rate from the APR.
Real Return = APR - Inflation Rate
= 3.75% - 4.25%
= -0.50%
Therefore, we can see that the real return on the CD is negative 0.50%.

You Have $5,000 in a 36 Month Certificate of Deposit