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You are an excellent investor and have averaged a 12% rate of return over the last...

You are an excellent investor and have averaged a 12% rate of return over the last 20 years. Over the same time period, inflation has averaged 3.2%. What is the real rate of return you have earned on your investments?

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Answer #1

According to Fischer equation

Nominal interest rate - inflation=real interest rate

.12-.032= .088

8.8% real interest rate

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