If the Nominal Return on an Investment of Common Stocks

question 35

Multiple Choice

If the nominal return on an investment of common stocks was 11% and inflation was 2.5% annually,what was the real return on common stock?

• A) 8.3%
• B) 8.5%
• C) 9.7%
• D) 11.0%
• E) 12.6%

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Definitions:

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1.

Null Hypothesis

A default hypothesis in statistical inference that proposes no significant effect or relationship exists between variables.

Rejected

In statistical hypotheses testing, the term refers to the conclusion to not accept the null hypothesis based on the evidence provided by the data.

Alternative Hypothesis

A statement that contradicts the null hypothesis and indicates what the researcher expects to find.