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%.

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Definitions:

Equal Protection

A constitutional principle in the United States that requires states to govern impartially, not discriminating between individuals or groups particularly in rights and responsibilities.

Fourteenth Amendment

An amendment to the U.S. Constitution that grants citizenship to all persons born or naturalized in the United States and prohibits states from denying any person equal protection under the law.

Federal Supremacy

The principle that federal law takes precedence over state law in the United States under the Supremacy Clause of the U.S. Constitution.

Article VI

In the context of the U.S. Constitution, Article VI establishes the Constitution, federal statutes, and U.S. treaties as "the supreme Law of the Land," overriding state laws.