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Commerce Exam  >  Commerce Tests  >  Test: Nominal Rate of Return - Commerce MCQ

Test: Nominal Rate of Return - Commerce MCQ


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15 Questions MCQ Test - Test: Nominal Rate of Return

Test: Nominal Rate of Return for Commerce 2024 is part of Commerce preparation. The Test: Nominal Rate of Return questions and answers have been prepared according to the Commerce exam syllabus.The Test: Nominal Rate of Return MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Nominal Rate of Return below.
Solutions of Test: Nominal Rate of Return questions in English are available as part of our course for Commerce & Test: Nominal Rate of Return solutions in Hindi for Commerce course. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free. Attempt Test: Nominal Rate of Return | 15 questions in 15 minutes | Mock test for Commerce preparation | Free important questions MCQ to study for Commerce Exam | Download free PDF with solutions
Test: Nominal Rate of Return - Question 1
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If an investment earns a nominal rate of return of 9% and the inflation rate is 3%, what is the real rate of return?

Detailed Solution for Test: Nominal Rate of Return - Question 1

Real rate of return = Nominal rate of return - Inflation rate = 9% - 3% = 6%

Test: Nominal Rate of Return - Question 2
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A bond offers a nominal rate of return of 7% and the expected inflation rate is 2%. What is the real rate of return?

Detailed Solution for Test: Nominal Rate of Return - Question 2

Real rate of return = Nominal rate of return - Inflation rate = 7% - 2% = 5%

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Test: Nominal Rate of Return - Question 3
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If the nominal rate of return is 10% and the real rate of return is 6%, what is the inflation rate?

Detailed Solution for Test: Nominal Rate of Return - Question 3

Inflation rate = Nominal rate of return - Real rate of return = 10% - 6% = 4%

Test: Nominal Rate of Return - Question 4
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An investment earns a nominal rate of return of 12% and the real rate of return is 8%. What is the inflation rate?
Detailed Solution for Test: Nominal Rate of Return - Question 4

Inflation rate = Nominal rate of return - Real rate of return = 12% - 8% = 4%

Test: Nominal Rate of Return - Question 5
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If the nominal rate of return is 8% and the inflation rate is 4%, what is the expected real rate of return?
Detailed Solution for Test: Nominal Rate of Return - Question 5

Real rate of return = Nominal rate of return - Inflation rate = 8% - 4% = 4%

Test: Nominal Rate of Return - Question 6
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A stock provides a nominal rate of return of 7%. If the real rate of return is 3%, what is the inflation rate?
Detailed Solution for Test: Nominal Rate of Return - Question 6

Inflation rate = Nominal rate of return - Real rate of return = 7% - 3% = 4%

Test: Nominal Rate of Return - Question 7
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An investor receives a nominal rate of return of 6% on their portfolio, and the inflation rate is 2%. What is the real rate of return?
Detailed Solution for Test: Nominal Rate of Return - Question 7

Real rate of return = Nominal rate of return - Inflation rate = 6% - 2% = 3%

Test: Nominal Rate of Return - Question 8
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If the nominal rate of return is 11% and the real rate of return is 5%, what is the inflation rate?
Detailed Solution for Test: Nominal Rate of Return - Question 8

Inflation rate = Nominal rate of return - Real rate of return = 11% - 5% = 6%

Test: Nominal Rate of Return - Question 9
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A bond offers a nominal rate of return of 5%, and the real rate of return is 2%. What is the inflation rate?
Detailed Solution for Test: Nominal Rate of Return - Question 9

Inflation rate = Nominal rate of return - Real rate of return = 5% - 2% = 7%

Test: Nominal Rate of Return - Question 10
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An investment earns a nominal rate of return of 8%, and the expected inflation rate is 3%. What is the real rate of return?
Detailed Solution for Test: Nominal Rate of Return - Question 10

Real rate of return = Nominal rate of return - Inflation rate = 8% - 3% = 5%

Test: Nominal Rate of Return - Question 11
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What does the nominal rate of return represent?
Detailed Solution for Test: Nominal Rate of Return - Question 11

The nominal rate of return represents the rate of return earned on an investment before adjusting for the effects of inflation.

Test: Nominal Rate of Return - Question 12
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What happens to the nominal rate of return if inflation increases?
Detailed Solution for Test: Nominal Rate of Return - Question 12

When inflation increases, the nominal rate of return typically increases as well, assuming other factors remain constant. This is because investors may demand higher nominal returns to compensate for the eroding purchasing power caused by inflation.

Test: Nominal Rate of Return - Question 13
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Which of the following is true about the nominal rate of return?
Detailed Solution for Test: Nominal Rate of Return - Question 13

The nominal rate of return includes the effects of inflation, whereas the real rate of return adjusts for inflation. Since the nominal rate of return includes inflation, it is typically higher than the real rate of return, except in cases where inflation is negative.

Test: Nominal Rate of Return - Question 14
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Which of the following is NOT a component of nominal rate of return?
Detailed Solution for Test: Nominal Rate of Return - Question 14

The nominal rate of return includes components such as the real rate of return, inflation rate, and any other premiums or returns associated with the investment, such as risk premium or expected return. The real rate of return is a separate component used to calculate the nominal rate of return.

Test: Nominal Rate of Return - Question 15
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Which of the following accurately describes the relationship between nominal rate of return and real rate of return?
Detailed Solution for Test: Nominal Rate of Return - Question 15

The nominal rate of return is composed of the real rate of return plus the inflation rate. Mathematically, it can be expressed as: Nominal rate of return = Real rate of return + Inflation rate. This relationship reflects how inflation affects the nominal rate of return.

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