Exciting Investment Returns Calculation!

What is the real return on a bond offering 13.20% nominal return in a year with 6.20% inflation?

a. 6.59% b.6.17% c.15.30% d.10.42%

The real return on the bond is 7.00%.

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The real return on an investment is the nominal return adjusted for inflation. To calculate the real return, we need to subtract the inflation rate from the nominal return. In this case, the bond offers a nominal return of 13.20% during a year in which the inflation rate is 6.20%.

To calculate the real return:

1. Subtract the inflation rate from the nominal return:

Nominal return - Inflation rate = Real return

13.20% - 6.20% = 7.00%