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Real return

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If you earn a 10% nominal return on an investment, are you really 10% more wealthy?

a. No, because there may be inflation, which causes your real return to be less
b. No, because if inflation = 0, then your real return is less
c. Yes, because you really have 10% more dollars
d. Yes, because inflation does NOT effect your real wealth
e. Yes, because nominal returns are the returns widely published & quoted in the press

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Solution Summary

The response discusses the real return. If you earn a 10% nominal return on an investment, are you really 10% more wealthy is determined.

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