A 150% real return in Brazil is higher than a 15% dollar return in the U.S.
A)because arbitrage opportunities exist
B)when the inflation controls are suspended in Brazil
C)it depends on whether these are nominal or real returns
D)regardless of nominal or real returns

Question

Quizplus · Accepted Answer

The distinction between nominal and real returns is crucial in comparing returns across different countries or currencies. A 150% real return accounts for inflation, meaning the actual purchasing power has increased by this percentage. A 15% dollar return could be nominal or real. If it's nominal, it doesn't account for inflation in the U.S., making the comparison with a real return in Brazil inappropriate without adjusting for inflation. If both are real returns, the comparison is valid, but the value of the returns still depends on the inflation rates and currency exchange rates between the two countries.

A 150% Real Return in Brazil Is Higher Than a 15