You Want to Earn a Real Rate of Return of 4.00

question 34

Multiple Choice

You want to earn a real rate of return of 4.00% at a time when the inflation rate is 2.05%. What is the approximate nominal rate that you must earn?

• A)5.75%
• B)5.95%
• C)6.05%
• D)6.15%
• E)6.25%

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Definitions:

IASB

The International Accounting Standards Board, which is responsible for developing and issuing International Financial Reporting Standards (IFRS) used in many parts of the world.

IFRS Reporting

Stands for International Financial Reporting Standards, a set of accounting standards that provide guidance on how financial transactions and other accounting events should be reported in financial statements.

Transition Plan

A strategy or roadmap designed to navigate from a current state to a desired future state, often found in project management or career development.

Convergence Efforts

Initiatives aimed at eliminating differences between various accounting standards (like between IFRS and GAAP) to achieve global consistency.