A major difference between real and nominal returns is that:
A) real returns adjust for inflation, and nominal returns do not.
B) real returns use actual cash flows, and nominal returns use expected cash flows.
C) real returns adjust for commissions, and nominal returns do not.
D) real returns show after-tax returns, and nominal returns show before-tax returns.

Question

Quizplus · Accepted Answer

Real returns are adjusted for inflation, reflecting the true purchasing power of the returns, while nominal returns are not adjusted for inflation.

A Major Difference Between Real and Nominal Returns Is That