Which Formula Computes the Actual Real Rate of Return on an Investment

question 25

Multiple Choice

Which formula computes the actual real rate of return on an investment?

• A)r = (1 + R )- (1 + h)
• B)r = (1 + R )/ (1 + h)
• C)r = (1 + R )- (1 + h)- 1
• D)r = (1 + R )/ (1 + h)- 1
• E)R = (1 + r)× (1 + h)- 1

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Definitions:

Quota

A government-imposed limit on the amount or value of goods that can be imported or exported during a specified time period, often used to protect domestic industries.

Factor Endowments

The quantity and quality of labor, land, and capital that a country possesses and can utilize for manufacturing.

Free Trade

A policy wherein a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports).

Tariffs

Government levies on goods brought into the country.