hey guys, A quick question related to the nominal return within IPS questions, when we are given PV, FV, N, PMT andwe are supposed to get the 1/Y (required return), when should we adjust it for inflation and when we should not? In CFAI 2007 past exam, they added back inflation, in another CFAI past exam, 2009 I guess but I am not sure, they did not… Thanks, M.
they add inflation in all their past exam questions for the last three years, the only question they didn’t was 2008 part D ii). and the reason for this is because in the question its stated the client calculated how much they need in 5 years (so assumption he took into account inflation).