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29 October, 15:23

Josephine earned a 15% return on her investments last year. If the inflation rate that year was 4%, what is her real rate of return?

A. 4%

B. 11%

C. 15%

D. 19%

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Answers (2)
  1. 29 October, 17:14
    0
    The answer will be c
  2. 29 October, 18:29
    0
    B. 11%

    Step-by-step explanation:

    Using the formula

    Real rate of return = nominal rate - inflation rate

    Note that the nominal rate of a business is the return on investment in a particular year.

    Therefore if Josephine earned a 15% return on her investments last year, her nominal rate is also 15%

    Since the inflation rate is 4%

    Rate of return = 15%-4%

    Rate of return = 11%
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