Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CSI IFC Exam - Topic 4 Question 2 Discussion

Actual exam question for CSI's IFC exam
Question #: 2
Topic #: 4
[All IFC Questions]

For the last year, an investor earned a return before adjustment for inflation of 2% on a money market fund, while inflation averaged 1.5%. What was his nominal rate of return?

Show Suggested Answer Hide Answer
Suggested Answer: D

The nominal rate of return is the return before adjustment for inflation, which is given as 2%. The real rate of return would be adjusted for inflation (2% - 1.5% = 0.5%), but the question asks for the nominal rate. The feedback from the document states:

'It is important to consider the effects of inflation on investments because we can isolate the difference between nominal and real returns. Investors are more concerned with the real rate of return -- the return adjusted for the effects of inflation. A nominal return is a return that has not been adjusted for the impact of inflation. The approximate real rate of return is calculated as: Real Return = Nominal Rate - Annual Inflation Rate.'


by Enola at Jan 28, 2026, 05:26 AM

Limited Time Offer

25%

Off

Get Premium IFC Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Evan
15 days ago
I thought it would be higher than that!
upvoted 0 times
...
Ruthann
20 days ago
So, does inflation really only affect the real return?
upvoted 0 times
...
Tish
25 days ago
Wait, is it really that simple?
upvoted 0 times
...
Alaine
1 month ago
Totally agree, it's just the stated return.
upvoted 0 times
...
Theodora
1 month ago
The nominal rate of return is 2%.
upvoted 0 times
...
Tiffiny
1 month ago
This is a piece of cake. The nominal rate of return is just the return before inflation, so the answer is D) 2.00%. No need to overthink it.
upvoted 0 times
...
Willetta
2 months ago
C) 3.50% is the way to go. Gotta factor in that sweet, sweet 2% return plus the 1.5% inflation. Easy money!
upvoted 0 times
...
Yvonne
2 months ago
Haha, I bet the person who wrote this question was trying to trick us. But I'm not falling for it - the answer is obviously D) 2.00%.
upvoted 0 times
...
Darci
2 months ago
D) 2.00% is the correct answer. The question states the return before inflation was 2%, so that's the nominal rate.
upvoted 0 times
...
Hubert
2 months ago
The answer is clearly B) 1.50%. Inflation was 1.5%, so the nominal rate of return must be that.
upvoted 0 times
...
Micaela
2 months ago
I feel confused about this one. I thought nominal rates were just the stated rates, but I keep second-guessing myself. Could it really be 1.50%?
upvoted 0 times
...
Christiane
2 months ago
I practiced a similar question where we had to adjust for inflation. If the return is 2% and inflation is 1.5%, I guess the nominal rate is still 2.00%.
upvoted 0 times
...
Dahlia
3 months ago
I'm not entirely sure, but I remember something about nominal rates being different from real rates. Is it possible that the answer is 0.50%?
upvoted 0 times
...
Oneida
3 months ago
I think the nominal rate of return is just the return before inflation, so it should be 2.00%.
upvoted 0 times
...
Ora
4 months ago
I'm pretty confident the answer is D) 2.00%. The question states the investor earned a 2% return before adjusting for inflation, so that's the nominal rate of return.
upvoted 0 times
...
Elli
4 months ago
I'm a bit confused. Isn't the nominal rate of return the sum of the real rate of return and the inflation rate? If so, then the answer should be B) 1.50%.
upvoted 0 times
...
Macy
4 months ago
Okay, I think I got it. The nominal rate of return is the return before adjusting for inflation, which is 2%. So the answer must be D) 2.00%.
upvoted 0 times
...
Willodean
4 months ago
Wait, I'm not sure if that's the right approach. Isn't the nominal rate of return the actual rate of return before adjusting for inflation?
upvoted 0 times
...
Cory
4 months ago
Hmm, this seems straightforward. I just need to add the return and inflation rate together to get the nominal rate of return.
upvoted 0 times
...

Save Cancel