Q768
A main difference among real and nominal interest proceeds is that
A.
real returns adjust for inflation and nominal returns do not
AnswerB.
real returns use actual cash flows and nominal use expected cash flows
C.
real interest adjusts for commissions and nominal returns do not
D.
real returns show highest possible return and nominal returns show lowest possible returns
Answer: Option A
Solution
Answer: Option A
Solution:
A main difference among real and nominal interest proceeds is that real returns adjust for inflation and nominal returns do not. A real rate of return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external factors. Adjusting the nominal return to compensate for factors such as inflation allows you to determine how much of your nominal return is real return.