A bond that pays interest annually yields an 8.5% rate of return. The inflation rate for the same period is 4.6%. What is the actual real rate of return on this bond?

A) 3.68%
B) 3.73%
C) 3.86%
D) 3.90%
E) 3.94%

Real Rate Of Return

The yearly percent gain achieved from an investment, corrected for price variations caused by inflation or other external factors.

Inflation Rate

Inflation rate is the annual percentage increase in the general price level of goods and services in an economy over a period of time.

Annually

Occurring once every year, often used to describe financial operations or events that happen yearly.