Jordan made an investment one year ago and is calculating the return for the year. If...
Jordan made an investment one year ago and is calculating the return for the year. If the real return was 5.25% and inflation was 2.6%, calculate (A) the approximate nominal return and (B) the exact nominal return.
Homework Answers
A
approx nominal rate = real return+inflation = 5.25+2.6 = 7.85%
B
| Real return = ((1+nominal return)/(1+inflation rate)-1)*100 |
| 0.0525=((1+Nominal return)/(1+0.026)-1)*100 |
| Nominal return = 7.99 |
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