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If You Are Promised a Nominal Return of 12% on a 1-Year

Question 44

Multiple Choice

If you are promised a nominal return of 12% on a 1-year investment, and you expect the rate of inflation to be 3%, what real rate do you expect to earn?


A) 5.48%
B) 8.74%
C) 9%
D) 12%

Correct Answer:

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