If a Bond Offers an Investor 11% in Nominal Return

question 59

Multiple Choice

If a bond offers an investor 11% in nominal return during a year in which the rate of inflation is 4%,then the investor's real return is:

• A) 6.73%.
• B) 6.31%.
• C) 15.44%.
• D) 10.56%.

---

Definitions:

Linear Relationship

A type of correlation where there is a constant rate of change between two variables.

Dependent Variable

A variable in an experiment or study whose changes are determined by the presence or manipulation of one or more independent variables.

Independent Variable

A variable in statistical analysis that is manipulated or categorized to observe its effect on a dependent variable.

Standard Deviation

A measure that is used to quantify the amount of variation or dispersion of a set of data values.