Question

An investment had a nominal return of 11.1 percent last year. If the real return on the investment was only 7.3 percent, what was the inflation rate for the year

Answer 1

Answer:

inflation rate= 3.8%

Explanation:

Giving the following information:

Nominal return= 11.1 percent

Real return= 7.3 percent

The real return on investments is the difference between the nominal return and the inflation rate.

Real return= nominal return - inflation rate

inflation rate= nominal return - real return

inflation rate= 11.1 - 7.3

inflation rate= 3.8%