What Nominal Return Was Received by an Investor When Inflation

question 25

Multiple Choice

What nominal return was received by an investor when inflation averaged 8.0 percent and the real rate of return was a negative 2.5 percent?

• A)5.30 percent
• B)5.36 percent
• C)6.50 percent
• D)10.77 percent

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding costs related to production or sourcing goods.

Variable Cost Per Unit

Variable cost per unit is the cost that varies with the level of output, calculated by dividing the total variable costs by the number of units produced.

Activity Level

The degree of operational intensity or volume of production in a business, often influencing costs and revenues.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue contributes toward covering fixed costs and generating profit.