To estimate the real return for the year, one would take
A) nominal return + inflation.
B) nominal return/inflation.
C) inflation/nominal return.
D) nominal return - inflation.

Question

Quizplus · Accepted Answer

To estimate the real return for the year, one needs to subtract the inflation rate from the nominal return. This is because inflation reduces the purchasing power of the investment returns. Therefore, the real return is the actual increase in the value of the investment adjusted for inflation.

To Estimate the Real Return for the Year, One Would