Suppose Jean Splicer, an investor, buys $300,000 of shares of stock in a diversified bundle of Bio-tech firms and exactly one year later sells those shares for $315,000. Assume the value of the CPI at the date of Jean's purchase was 180 and rose by the sale date one year later to 190 while the value of the GDP Deflator was 120 at the time of her purchase and rose to 125 by the date she sold her shares. What was Jean's real rate of return on this investment?© BrainMass Inc. brainmass.com October 10, 2019, 2:28 am ad1c9bdddf
This is a question of real and nominal terms. I think we should use the CPI to discount the value of money. (Sometimes GDP deflator is also used, ...