If an investment providing a nominal return of 10.5% only offers a real rate of return of 6.4%, then the exact inflation rate (%) is closest to

If an investment providing a nominal return of 10.5% only offers a real rate of return of 6.4%, then the exact inflation rate (%) is closest to ________%.

Expert Solution

Particulars	Values
Nominal rate	10.50%
Real rate	6.40%

Inflation rate = [ [ 1 + Nominal Rate ] / [ 1 + Real rate ] ] - 1
= [ [ 1 + 0.11 ] / [ 1 + 0.06 ] ] - 1
= [ [ 1.105 ] / [ 1.064 ] ] - 1
= [ 1.0385 ] - 1
= 0.0385
i.e, Inflation rate is 3.85 %

Pls comment, if any further assistance is required.

jeff jeffy answered 2 years ago

If an investment providing a nominal return of 14.49% only offers a real rate of return...

If an investment providing a nominal return of 14.49% only offers a real rate of return of 3.86%, then the exact inflation rate (%) is closest to ________%. Input your answer without the % sign and round your answer to two decimal places.

The real rate of return on an investment is 3% and the inflation rate is 2.25%....

The real rate of return on an investment is 3% and the inflation rate is 2.25%. What is this investment's nominal rate of return

An investment currently pays 4% and the inflation rate is 1.5%. What is the exact real...

An investment currently pays 4% and the inflation rate is 1.5%. What is the exact real rate of interest? Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit the % sign in your response. For example, an answer of 15.39% should be entered as 15.39.

suppose the nominal risk-free rate of return in the U.S. is 2.8% and the inflation rate...

suppose the nominal risk-free rate of return in the U.S. is 2.8% and the inflation rate is 1.50%. what is the required rate of return ( or interest rate on a BBB-rated corporate bond with a default risk premium (or default spread) of 1.85%? ignore the liquidity and maturity premiums.

If the nominal interest rate is 3.25% and expected inflation is 2%, what is the real...

If the nominal interest rate is 3.25% and expected inflation is 2%, what is the real interest rate? Calculate it using the Fisher Effect and the shortened equation.

Distinguish between the nominal rate and the real rate of interest. How does inflation affect the...

Distinguish between the nominal rate and the real rate of interest. How does inflation affect the real, ex post (after the fact) rate of return to investors?

The nominal rate of interest is 7% and the real rate of interest is 3%. What is the expected inflation rate?

If the nominal rate of interest is 13.02% and the real rate of interest is 8.01%, what is the expected rate of inflation?

If nominal and inflation rates were 11% and 1.5%, respectively, what was the true real return?...

If nominal and inflation rates were 11% and 1.5%, respectively, what was the true real return? Please show equation and work.

18. Using the Fisher Equation, compute the real rate of return if the nominal rate is...

18. Using the Fisher Equation, compute the real rate of return if the nominal rate is 120 percent and inflation is 100 percent. Group of answer choices a. 30 % b. 20 % c. 10 % d. zero percent

Question