Nico Bought an Investment One Year Ago and Just Calculated

question 38

Multiple Choice

Nico bought an investment one year ago and just calculated his return on investment. He found that his purchasing power had increased by 15 percent as a result of his investment. If inflation during the year was 4 percent, then Nico's

• A) real return on investment is more than 15 percent.
• B) nominal return on investment is more than 15 percent.
• C) nominal return on investment is less than 11 percent.
• D) real return on investment is equal to 4 percent.

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Definitions:

Opening Inventory

The inventory that a business has on hand at the start of an accounting period, consisting of products and materials.

Production Budget

An estimate of the total cost of production, including detailed allocations for raw materials, labor, and overhead expenses.

Units

A measure of quantity, such as items produced or services rendered, used in various business contexts.

Cash Disbursements

The total amount of money paid out by a company over a period, including expenses, investments, and debts.