Question

What nominal return was received by an investor when inflation averaged 3.46% and the real rate of return was 2.5%

Answer 1

Nominal rate of return= 0.0596 = 5.96%

Step-by-step explanation:

Giving the following information:

Inflation averaged 3.46%

The real rate of return was 2.5%

To calculate the nominal rate of return, we need to use the following formula:

Real rate of return= nominal rate of return - inflation rate

Nominal rate of return= real rate of retunr + infaltion rate

Nominal rate of return= 0.0346 + 0.025

Nominal rate of return= 0.0596 = 5.96%