Say you own an asset that had a total return last year of 15 percent. Assume the inflation rate last year was 4.3 percent. What was your real return?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

To calculate the real return, we can use the formula for the real return based on the nominal return and inflation rate:

\[
\text{Real Return} = \frac{1 + \text{Nominal Return}}{1 + \text{Inflation Rate}} - 1
\]

Where:
- Nominal Return is 15% or 0.15
- Inflation Rate is 4.3% or 0.043

Substituting the values into the formula:

\[
\text{Real Return} = \frac{1 + 0.15}{1 + 0.043} - 1
\]

Let's calculate it.The real return on your asset, after accounting for inflation, is **10.26%**.

Would you like more details on the calculation or have any further questions?

Here are five related questions you might explore:
1. How does the real return differ if the inflation rate increases to 6%?
2. What would the nominal return be if the real return was 10% and inflation was 4.3%?
3. How does inflation impact the purchasing power of investment returns?
4. What happens to real returns when the inflation rate exceeds the nominal return?
5. How can inflation be hedged when investing in assets?

**Tip**: Always check the difference between nominal and real returns to understand how inflation erodes purchasing power.

Say you own an asset that had a total return last year of 15 percent. Assume the inflation rate last year was 4.3 percent. What was your real return?

Learn how to calculate the real return on an asset with a 15% nominal return and 4.3% inflation rate. This problem uses the formula for real return and covers the impact of inflation on investment returns. Suitable for students in Grades 9-12.

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