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
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
Section: Chapter Questions
Problem 1PS
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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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