How Much Would an Investor Need to Receive in Nominal

question 23

Multiple Choice

How much would an investor need to receive in nominal return if she desires a real return of 4 percent and the rate of inflation is 5 percent?

• A)4.20 percent
• B)8.64 percent
• C)9.00 percent
• D)9.20 percent 1.04 = 1 + nominal return/1.05

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Definitions:

Resource Consumption

The use of resources (such as raw materials, energy, or labor) by a process, project, or activity, typically measured to manage efficiency and costs.

Activity-based Costing

A costing methodology that assigns costs to products or services based on the resources they consume.

First-stage Allocation

The initial process of assigning indirect costs to relevant cost objects or activities, typically in a cost accounting system.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate picture of the cost to produce a product or service.