Problem 6.11 – Inflation Over Next year

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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A person believes that the total real return on an investment over the next year will be a certain percentage, but the total return is expected to be another percentage. What does this person believe the inflation rate to be during that year? Determine the inflation rate given an investment return and a real return over the next year.

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