If the nominal rate of return on investment is 6% and inflation is 2% over a holding period, what is the real rate of return on this investment?
A) 3.92%
B) 4%
C) 4.12%
D) 6%

Name: If the nominal rate of return on investment is 6% and inflation is 2% over a holding period, what is the real rate of return on this investment? A) 3.92% B) 4% C) 4.12% D) 6%
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Question

Quizplus · Accepted Answer

1 + r = (1 + R)/(1 + i) - 1
1 + r = 1.06/1.02 - 1 = .0392

If the Nominal Rate of Return on Investment Is 6