Question

The inflation rate over the past year was 3.7 percent. If an investment had a real return of 9.2 percent, what was the nominal return on the investment?

Answer 1

The nominal return on the investment is 13.2404%

Step-by-step explanation:

The computation of the nominal return on the investment is shown below:

As we know that

nominal return = (1 + real rate) × (1 + inflation rate) - 1

= [(1 +0.092) × (1 + 0.037)] - 1

= (1.037 × 1.092) - 1

= 13.2404%

Hence, the nominal return on the investment is 13.2404%

We simply applied the above formula so that the correct value could come

And, the same is to be considered