George Bought an Investment One Year Ago and Just Calculated

question 212

Multiple Choice

George bought an investment one year ago and just calculated his return on investment. He found that his purchasing power has increased by 15% as a result of his investment. If inflation over the
Period was 4%, his _________________.

• A) real return on investment is more than 15%
• B) nominal return on investment is more than 15%
• C) nominal return on investment is less than 11%
• D) real return on investment is equal to 4%
• E) ability to purchase goods has declined over the past year

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Definitions:

Shareholder

An individual or entity that owns shares in a company, giving them a claim on part of its assets and earnings.

Pre-emptive Rights

Rights that allow existing shareholders to purchase additional shares in a company before new shares are offered to the public, to maintain their proportional ownership.

Shareholder's Agreement

A contract among the shareholders of a company outlining their rights, responsibilities, and obligations.

Voting Rights

The entitlement of individuals to participate in the election of government officials and to have their vote counted.