I do not get how they got nominal return in one calculation and real return using the same calculation.
Christa needs $82,500, from a portfolio of $1,120,000 = 7.4% nominal return.
And then they say she can reduce spending by $32,500, so
Christa needs $50,000, from a portfolio of $1,120,000 = 4.5% real return.
Huh?
No, it says the portfolio’s return is $82,500 which is 7.4% nominal.
She needs 4.5% real return based on her reduced budget.
So the 7.4% nominal, when converted to real terms, is only 4.4% so it does not meet her needs.
on snap. you are a genius.
Is there any way to answer the EOC questions on reading 10 without going through the whole Inger Marine scenario in the CFA reading?