Assume the nominal rate of return is 5.08% and the inflation rate is 6.10%. Find the real rate of return using the exact formula.
Answer Format: Percentage Round to: 0 decimal places (Example: 9%, % sign required. Will accept decimal format rounded to 2 decimal places (ex: 0.09))
Solution :-
(1 + Real Rate of Return) = (1+Nominal Return)/(1+Inflation)
(1 + Real Rate of Return) = (1+0.0508)/(1+0.061)
(1 + Real Rate of Return ) = 0.99038
Real rate of return = 0.99038 - 1 = -0.0096 = -1%
Assume the nominal rate of return is 5.08% and the inflation rate is 6.10%. Find the...
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