If the real return on U.S. Treasury bills is 14 percent while the rate of expected inflation is anticipated to be 8 percent, then what should nominal rate of return be? (Round final percentage answer to decimal places.)

Question

Quizplus · Accepted Answer

The nominal rate of return can be calculated using the Fisher equation:

Nominal rate = Real rate + Expected inflation

Substituting the given values, we get:

Nominal rate = 14% + 8% = 22%

Therefore, the nominal rate of return should be 22%, which is closest to choice C (23.12%).

If the Real Return on U