Answered

What nominal return would an investor need to receive if he desires a real return of 4% and the rate of inflation is 5%

Answer :

facundobuzzetti

Answer:

Nominal interest rate= 0.09 = 9%

Explanation:

Giving the following information:

Real return= 4%

Rate of inflation= 5%

To calculate the nominal interest rate, we need to use the following formula:

Real interest rate= nominal interest rate - inflation rate

Nominal interest rate= real interest rate + inflation rate

Nominal interest rate= 0.04 + 0.05

Nominal interest rate= 0.09

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