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You Open an Investment Account That Earns a Nominal Interest

Question 112

Multiple Choice

You open an investment account that earns a nominal interest rate of 4.2% a year. The current consumer price index is 108. In one year, the consumer price index is expected to go to 106. What is your expected real rate of return?


A) -1.85%
B) 4.2%
C) 6.05%
D) 7.35%

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