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Assume that last year, Catrin earned 9.8 percent on his investments while U.S. Treasury bills yielded 2.3 percent, and the inflation rate was 1.4 percent. What real rate of return did he earn on his investments last year

Respuesta :

abiolataiwo2015

The real rate of return did he earn on his investments last year is: 8.28%.

Real rate of return

Using this formula

Real rate of return=(1+Last year rate/1+Inflation rate)-1

Let plug in the formula

Real rate of return=(1+.098 / 1+.014) − 1

Real rate of return = (1.098 / 1.014) − 1

Real rate of return= .0828×100

Real rate of return= 8.28%

Therefore the real rate of return did he earn on his investments last year is: 8.28%.

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