A bond investment yielded 8%. If inflation was 3%, what real return did the bond offer? Round your answer to the nearest tenth of a percent.
A)+4.9%
B)+5.2%
C)+1.0%
D)-4.6%

Question

Quizplus · Accepted Answer

The real return can be calculated using the formula: Real Return = ((1 + nominal return) / (1 + inflation rate)) - 1. Substituting the given values: Real Return = ((1 + 0.08) / (1 + 0.03)) - 1 = 0.0485 or 4.9% when rounded to the nearest tenth of a percent.

A Bond Investment Yielded 8