what is the nominal rate of return on an investment?

Rate of return has three types
1)Nominal rate of return:
The rate which includes the effect of inflation is called the nominal rate of return.
2)Real rate of return:
The rate adjusted for the inflation effect is called real rate of return. This is called real because this is the actual return which an individual gets in net.

How to calculate real rate of return;
there are two methods for calculating real rate of return.

Approximation method: Real rate of return = Nominal rate of return – Inflation rate

Exact method : Real rate = (1+Nominal rate)/(1+Inflaion rate) -1
For example: If the nominal rate is 10% and inflation is 7% then real rate would be as follows;

Approx: real rate = 10 7= 3%
Exact = 1.1/1.07 -1 = 2.8%

3)Risk adjusted rate of return:
This is a rate which is adjusted for any type of risk other than inflation risk, like liquidity risk, maturity risk, Market risk, interest rate risk etc.