Over a 20-year period an investment of $1,000 in common stocks returned an average of 11% in nominal terms and 4% in real terms.At the end of the 20 years,the portfolio value was:
A) $1,800 in real terms.
B) $3,679.19 in real terms.
C) $7,870.59 in nominal terms.
D) $8,062.31 in nominal terms.

Question

Quizplus · Accepted Answer

FV_Nominal = $1,000(1.11)²⁰ = $8,062.31FV_Real = $1,000(1.04)²⁰ = $2,191.12

Over a 20-Year Period an Investment of $1,000 in Common