Question

The inflation rate over the past year was 2.4 percent. If an investment had a real return of 7.6 percent, what was the nominal return on the investment

Answer 1

Nominal interest rate= 0.1 = 10%

Step-by-step explanation:

Giving the following information:

The inflation rate over the past year was 2.4 percent.

An investment had a real return of 7.6 percent.

To calculate the nominal interest rate, we need to use the following formula:

Real interest rate= nominal interest rate - inflation rate

Nominal interest rate= real interest rate + inflation rate

Nominal interest rate= 0.076 + 0.024

Nominal interest rate= 0.1