Pregunta
upstudy study bank question image url

An investment had a nominal return of 11.7 percent last year. The inflation rate was 4.4 percent. What was the real return on the investment? o. \( 11.58 \% \) b. \( 7.77 \% \) c. \( 6.54 \% \) d. \( 6.99 \% \) e. \( 16.61 \% \)

Ask by Best Bolton. in the United States
Feb 26,2025

Solución de inteligencia artificial de Upstudy

Respuesta verificada por el tutor

Responder

The real return on the investment is approximately 6.99%.

Solución

To calculate the real return, use the formula:   Real Return = [(1 + Nominal Return) / (1 + Inflation Rate)] − 1 Here, the nominal return is 11.7% (or 0.117) and the inflation rate is 4.4% (or 0.044). Plug in the numbers:   Real Return = (1.117 / 1.044) − 1 Calculating the division:   1.117 / 1.044 ≈ 1.07 Then subtract 1:   Real Return ≈ 0.07 (or 7%) Comparing this with the answer choices, the option closest to 7% is 6.99%. Thus, the answer is 6.99%.

Respondido por UpStudy AI y revisado por un tutor profesional

error msg
Explicar
Simplifique esta solución

Mind Expander

To find the real return on the investment, you can use the formula: \[ \text{Real Return} = \frac{1 + \text{Nominal Return}}{1 + \text{Inflation Rate}} - 1 \] Plugging in the values: \[ \text{Real Return} = \frac{1 + 0.117}{1 + 0.044} - 1 \approx 0.0702 \text{ or } 7.02\% \] So the answer closest to the real return is d. \( 6.99 \% \). Calculating the real return is essential for investors as it provides a clearer picture of how much their investments are genuinely growing after accounting for inflation. Understanding this helps in making more informed decisions! Also, it's interesting to note that many investors overlook the effects of inflation, focusing solely on nominal returns. This can lead to the illusion of making money when, in fact, purchasing power isn't increasing as much as they think. It's all about keeping an eye on the inflation trend!

preguntas relacionadas

¡Prueba Premium ahora!
¡Prueba Premium y hazle a Thoth AI preguntas de matemáticas ilimitadas ahora!
Quizas mas tarde Hazte Premium
Estudiar puede ser una verdadera lucha
¿Por qué no estudiarlo en UpStudy?
Seleccione su plan a continuación
Prima

Puedes disfrutar

Empieza ahora
  • Explicaciones paso a paso
  • Tutores expertos en vivo 24/7
  • Número ilimitado de preguntas
  • Sin interrupciones
  • Acceso completo a Respuesta y Solución
  • Acceso completo al chat de PDF, al chat de UpStudy y al chat de navegación
Básico

Totalmente gratis pero limitado

  • Solución limitada
Bienvenido a ¡Estudia ahora!
Inicie sesión para continuar con el recorrido de Thoth AI Chat
Continuar con correo electrónico
O continuar con
Al hacer clic en "Iniciar sesión", acepta nuestros términos y condiciones. Términos de Uso & Política de privacidad