If an Investment Offered a Nominal Return of 10%, and Inflation

question 33

Multiple Choice

If an investment offered a nominal return of 10%, and inflation was 15.8% over the period, what was the real return on this investment? Round your answer to the nearest tenth of a
Percent.

• A)+4.8%
• B)+0.9%
• C)-13.6%
• D)-5.0%

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Definitions:

Levered Beta

A measurement of the volatility of a stock, including the impact of the company's debt, relative to the market as a whole.

Unlevered Beta

A measure of how much the stock of a company is expected to move if the stock market moves 1 point, without considering the company's debt.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity.

Variable Cost

Variable Cost refers to expenses that change directly and proportionally with the level of production or sales activity, such as raw materials and direct labor costs.