Hi all, When given the required return in an IPS problem, should we always assume its given as real return or is it nominal return? For example, in question 2 in the CFAI volume 2 book, pg. 145, it seems like if we’re given the rate of return on a portfolio of investments, we should always consider that nominal. But when calculating required return (living expenses, etc), we should always consider this real return?
I don’t think there’s a clear cut answer, it depends on the information given (e.g. they throw in a sentence or two regarding inflation).