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24 December, 13:21

What's your real rate of return if your savings account pays 2.5% interest and inflation is at 1%?

A. 1.5%

B. 2.5%.

C. 3.5%

D. Can't calculate.

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Answers (1)
  1. 24 December, 15:54
    0
    Real rate of return = 1.5%

    Step-by-step explanation:

    Given:

    Savings account return = 2.5%

    Inflation rate = 1%

    Find:

    Real rate of return = ?

    Computation:

    ⇒ Nominal rate of return = Real rate of return + Inflation rate

    ⇒ Real rate of return = Savings account return - Inflation rate

    ⇒ Real rate of return = 2.5% - 1%

    ⇒ Real rate of return = 1.5%
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