An investment had a nominal return of 9.9 percent last year. The inflation rate was 3.1 percent. What was the real return on the investment?
Question
Solution 1
To calculate the real return on an investment, you need to take into account the effect of inflation on the nominal return. The formula to calculate the real return is:
Real Return = ((1 + Nominal Return) / (1 + Inflation Rate)) - 1
In this case, the nominal return is 9.9% or 0.099 (when expressed Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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