The ABC Corporation earned a real rate return of 4.5 percent on an investment. In the economy, the nominal rate of interest was 6 percent and the rate of inflation was 3 percent. We can conclude that

Question

Quizplus · Accepted Answer

The real rate of return is calculated as nominal rate minus inflation rate. In this case, the real rate of return is 6% - 3% = 3%. As the ABC Corporation earned a real rate of return of 4.5%, it means that the investment was profitable.

The ABC Corporation Earned a Real Rate Return of 4