Real returns are in other words, inflation adjusted returns. Over the long-term, it’s important to consider the impact of inflation on returns to determine if we are wealthier. We increase our purchasing power or wealth, if our returns outstrip inflation over a given period.
Key learning objectives:
Identify the two methods in calculating real returns
Use the calculation to determine if wealth has increased or decreased
Introduction to Options, Pricing and Use Cases
Peter Eisenhardt • 13:18