You Want to Earn a Real Rate of Return of 3.75

question 47

Multiple Choice

You want to earn a real rate of return of 3.75 percent at a time when the inflation rate is 2.33 percent.What is the approximate nominal rate which you must earn?

• A) 5.78 percent
• B) 5.96 percent
• C) 6.08 percent
• D) 6.14 percent
• E) 6.28 percent

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Definitions:

Avoid Liability

Strategies or actions taken to minimize or evade legal responsibility or penalties.

Intoxicated Person

An individual under the influence of alcohol or drugs to the extent that their mental and physical faculties are significantly impaired.

Voidable

A term used to describe a contract that is valid and enforceable, but may be legally declared void at the option of one of the parties due to certain defects.

Minor

A person under the age of majority, legally considered incapable of making certain decisions and contracts on their own behalf.