What is the minimum nominal rate of return should you accept, if you require a 4 percent real rate of return and the rate of inflation is expected to average 3.5 percent during the investment period?
A)7.36 percent
B)7.50 percent
C)7.64 percent
D)8.01 percent 1.04 =

Question

Quizplus · Accepted Answer

The nominal rate of return can be calculated using the Fisher equation: (1 + nominal rate) = (1 + real rate) * (1 + inflation rate). Plugging in the values: (1 + nominal rate) = 1.04 * 1.035 = 1.0764, which gives a nominal rate of approximately 7.64 percent.

What Is the Minimum Nominal Rate of Return Should You