Say you own an asset that had a total return last year of 10.3 percent. If...

Say you own an asset that had a total return last year of 10.3 percent. If the inflation rate last year was 4.1 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.)

Expert Solution

As per Fisher’s Equation

Nominal Interest Rate = Real Interest Rate + Inflation

So, 10.3 = Real Interest Rate + 4.1

So, Real Interest Rate = 10.3 – 4.1

= 6.20%

So, the Real Interest rate is 6.20%

jeff jeffy answered 2 years ago

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