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Alik
1 day ago
7

Say you own an asset that had a total return last year of 11.65 percent. If the inflation rate last year was 2.75 percent, what

was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
harina [3.5K]1 day ago
6 0

Answer:

8.66%

Explanation:

The calculation for the real rate of return is displayed below:

Real rate of return = {(1 + nominal rate of return) ÷ (1 + inflation rate)} - 1

= {(1 + 11.65%) ÷ (1 + 2.75%)} - 1

= {(1.1165) ÷ (1.0275)} - 1

= 1.086 - 1

= 0.0866 or 8.66%

By applying the formula where the numerator is the nominal rate of return and the denominator is the inflation rate

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