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If an investment yields 6% at the same time as inflation as measured by the CPI increases by 6%, the inflation-adjusted rate of return is:

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Parrain

Answer: 0%

Explanation:

The inflation-adjusted rate of return removes the effects of inflation from a return to find out the real return that an investment made.

Simple formula is;

= Nominal return - Inflation rate

= 6% - 6%

= 0%

The real rate of return is 0% meaning that if inflation is taken into account, the investment did not yield anything.

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