Question 29:

Assume that last year you purchased a real asset, say a piece of land, for $100,000. You paid $20,000 down and borrowed the balance. The rate of inflation between last year and this year was 6%. If the value of this asset increased at exactly the rate of inflation, and you sold it this year, the nominal rate of return on your $20,000 investment was: ______% (ignore the time value of money).

Refer to question 29. What was the real rate of return on your $20,000 investment? ______%

Refer to question 29. What would have been your nominal rate of return had you not been leveraged?

Refer to question 29. What would have been your real rate of return had you not been leveraged? ______%