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The performance for a FM system depends upon the RMS bandwidth (fr) of the modulated FM signal and the bandwidth (W) of the modulating signal. Increasing the RMS value of the modulating signal (sigmax) increases the RMS bandwidth of the FM signal. A typical FM radio clips the input modulating signal above a predefined threshold (Ac) to limit the maximum deviation (fd) of the carrier frequency so as to avoid interference on adjacent channels. Thus a high peak-to-average (PAR) OFDM modulating signal will undergo non-linear distortion due to clipping by the FM radio. In this paper the effects of distortion due to clipping on the OFDM/FM system the will be studied. The performance limitations will be investigated for M-ary QAM modulation (M=16, 64, 256) and different IDFT sizes (N=64,256,512). A simple scaling method is proposed to improve the signal-to-noise ratio (SNR) at the FM receiver which would improve BER performance of the OFDM signal.