What nominal annual return is required on an investment for an investor to experience a 12% gain in purchasing power? Assume inflation to be 4%.
A) 7.69%
B) 9.29%
C) 12.00%
D) 16.48%

Name: What nominal annual return is required on an investment for an investor to experience a 12% gain in purchasing power? Assume inflation to be 4%. A) 7.69% B) 9.29% C) 12.00% D) 16.48%
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Quizplus · Accepted Answer

To achieve a 12% real return with 4% inflation, the nominal return must be (1 + 0.12) * (1 + 0.04) - 1 = 16.48%.

What Nominal Annual Return Is Required on an Investment for an Investor