Alice learned that the difference between the real rate of return and the nominal or quoted rate of return is that
A)the real rate is adjusted for inflation.
B)the real rate is not adjusted for inflation.
C)the nominal rate is adjusted for inflation.
D)none of the above.

Question

Quizplus · Accepted Answer

The real rate of return is adjusted for inflation, meaning it reflects the actual increase in purchasing power of an investment. The nominal or quoted rate of return, on the other hand, does not take inflation into account and only reflects the percentage increase or decrease in the nominal value of an investment.

Alice Learned That the Difference Between the Real Rate of Return