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Finra Series-6 Exam - Topic 4 Question 110 Discussion

In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%. The average annual rate of inflation in 2008 was 3.85%. In this case:
B) Mr. Conservative earned a real return of -2.22% on his investment.
A) Mr. Conservative earned a nominal return of +3.85% on his T-bill investment.
C) Mr. Conservative earned a real return of +1.63% on his investment.
D) Mr. Conservative earned a nominal return of +2.22% on his investment.

Finra Series-6 Exam - Topic 4 Question 110 Discussion

Actual exam question for Finra's Series-6 exam
Question #: 110
Topic #: 4
[All Series-6 Questions]

In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%. The average annual rate of inflation in 2008 was 3.85%. In this case:

Show Suggested Answer Hide Answer
Suggested Answer: B

If Mr. Conservative bought a 1-year Treasury bill in 2008 that was yielding 1.63%, and the average annual rate of inflation in 2008 was 3.85%, Mr. Conservative earned a real return of -2.22 % on his investment. In other words, he lost 2.22% in purchasing power since the dollars he received when the bill matured were worth less than the dollars he paid to buy the bill. Real return = nominal return - inflation rate = 1.63% - 3.85% = -2.22%.


by Broderick at Jan 05, 2026, 05:16 AM

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Shizue
2 months ago
I’m leaning towards A. But it doesn’t account for inflation.
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Elke
2 months ago
Definitely B. Negative real return hurts.
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Jacquline
3 months ago
Agreed! Inflation was higher than the yield.
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Crissy
3 months ago
I think the answer is B. Real return is crucial.
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Malissa
3 months ago
Totally agree, B is the right answer!
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Brande
3 months ago
Wait, how can he earn a positive return with inflation that high?
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Shawn
3 months ago
Definitely a real return of -2.22%!
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Louvenia
3 months ago
Inflation was higher than the yield, so he lost money.
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Belen
4 months ago
Mr. Conservative's T-bill yield was 1.63%.
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Arthur
4 months ago
Wait, so the real return is negative? Looks like Mr. Conservative needs to rethink his investment strategy. Maybe he should try the stock market next time.
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Cammy
4 months ago
Inflation rate of 3.85%? Ouch, that's a tough one. No wonder Mr. Conservative is not too happy with his investment.
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Harrison
5 months ago
Nominal return? Real return? This is making my head spin. I'll just go with B and hope for the best.
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Luann
5 months ago
I thought the answer was C, but I guess I was wrong. Real return is the way to go!
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Twana
5 months ago
Option B is correct. The real return is the nominal return minus the inflation rate, which is -2.22%.
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Aleta
5 months ago
I feel like this is similar to a practice question we did on nominal vs. real returns, but I can't recall the exact numbers we used.
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Josephine
5 months ago
If inflation was higher than the yield, then I guess Mr. Conservative must have a negative real return, right?
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Leeann
5 months ago
I think the nominal return is just the yield of the T-bill, which is 1.63%, but I’m confused about how inflation plays into that.
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Donte
6 months ago
I remember we discussed how to calculate real returns by adjusting for inflation, but I'm not entirely sure about the exact formula.
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Yun
6 months ago
I'm feeling pretty confident about this one. The real return is the nominal return adjusted for inflation, so B is the right choice.
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Erinn
6 months ago
No problem, I've got this. The real return is the nominal return minus the inflation rate, so option B is the correct answer.
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Shawnta
6 months ago
Wait, I'm a little confused. Is the real return the difference between the nominal yield and the inflation rate? Or is it something else?
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Nidia
6 months ago
Okay, I think I've got this. The key is to compare the nominal yield on the T-bill to the inflation rate.
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Cecil
7 months ago
Hmm, this looks like a tricky question about real vs. nominal returns. I'll need to think through the calculations carefully.
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Rolland
11 days ago
Yeah, I agree! It’s all about how inflation eats into those gains.
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Dorothy
16 days ago
I think the inflation rate really affects the real return here.
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Beata
2 months ago
This is definitely tricky! Real vs. nominal can be confusing.
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