The real rate of return is related to O The risk-free rate The risk-free and the inflation rate The unemployment rate and the inflation rate The risk-free rate and the unemployment rate O The inflation rate

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The real rate of return is related
to
O The risk-free rate
The risk-free and the inflation rate
The unemployment rate and the
inflation rate
The risk-free rate and the
unemployment rate
O The inflation rate
Transcribed Image Text:The real rate of return is related to O The risk-free rate The risk-free and the inflation rate The unemployment rate and the inflation rate The risk-free rate and the unemployment rate O The inflation rate
Expert Solution
Step 1

Real rate of return
An annual profit percentage that is earned on the investment, being adjusted for inflation. Adjustment of the nominal return for compensating for inflation allows an investor in determining how much of the nominal return is the real return.

Step 2

It is computed by the formula:

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