An Individual Actually Earned a 4 Percent Nominal Return Last

question 49

Multiple Choice

An individual actually earned a 4 percent nominal return last year. Prices went up by 3 percent over the year. Given that the investment income was subject to a federal tax rate of 28 percent and a state and local tax rate of 6 percent,what was the investor's actual real after-tax rate of return?

• A)−0.36 percent
• B)0.66 percent
• C)0.72 percent
• D)1.45 percent
• E)2.64 percent

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