Note the nominal rate,0.32, is slightly higher than 0.30, the real rate (0.20) plus the inflation rate (0.10) . That’s because the nominal rate recognizes that inflation of 10% also decreases the purchasing power of the real rate of return of 20% earned during the year. The combination component represents the additional compensation investors seek for the decrease in the purchasing power of the real return earned during the year because of inflation.