What Nominal Annual Return Is Required on an Investment in Order

question 22

Multiple Choice

What nominal annual return is required on an investment in order that an investor experiences a 12 percent gain in purchasing power? Assume inflation to be 4 percent.

• A)7.69 percent
• B)9.29 percent
• C)12.00 percent
• D)16.48 percent

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Definitions:

Ego

In psychoanalytic theory, it is the part of the personality responsible for dealing with reality, mediating between the desires of the id and the constraints of the social world.

Personality

The melding of characteristics that establishes a person's distinct identity.

Superego

Within the realm of psychoanalytic theory, this aspect of a person's psyche serves as a self-judging moral guide, encapsulating the ethical standards assimilated from one's parents and teachers.

Conscience

An inner feeling or voice viewed as acting as a guide to the rightness or wrongness of one's behavior.