Max invested in his employer's stock program in 2011. The annual yield for his investment was 4%, and the inflation rate was 4%. What was the real growth rate of this investment?
A) −2%
B) 0%
C) 3.9%
D) 4%

Question

Quizplus · Accepted Answer

The real growth rate of an investment is calculated by adjusting the nominal growth rate (the reported percentage gain or loss) for inflation. In this case, with an annual yield of 4% and an inflation rate of 4%, the real growth rate is effectively 0% because the inflation negates the nominal gains from the investment.

Max Invested in His Employer's Stock Program in 2011