An asset had a real return of 12.6 percent and a nominal return of 15.3 percent. What was the approximate inflation rate for the year?
A) 2.7%
B) 27.9%
C) 13.2%
D) 3.9%
E) 4.6%

Question

Quizplus · Accepted Answer

The inflation rate can be calculated using the Fisher equation: 
Nominal Return = Real Return + Inflation Rate 
15.3% = 12.6% + Inflation Rate 
Inflation Rate = 15.3% - 12.6% 
Inflation Rate = 2.7% 
Therefore, the approximate inflation rate for the year was 2.7%.

An Asset Had a Real Return of 12