Can some one please help me out. I know nominal includes inflation and real does not but when calculating a return to a problem i always end up being wrong for instance there is a question in
CFA material Book 2 pg 207 question 11 part C
C) Select and justify with three reasons the most appropriate of the four portfolios from
The question states “An after-tax annual return of 5.4 percent is required over five years to meet the minimum pledge.”
How would i know i do not need to include inflation in this answer?
CFAI Book 2 page 207 are the answers to SS5 study session questions, something is off here
Are you looking at volume 2?
I am referring to CFA BOOK 2015 level III, Volume 2, Behavioral Finance, Indivisual investors, and institutional investors.
PAGE 207 are Practice problems to reading 9
Oh I see, it’s page 94 in the electronic version.
I am somewhat speculating here but I have been studying a lot and am confident in this: the Reguired After Tax Return, if you remember having to calculate it for things such as pensions and endowments, includes expected inflation. Also, for the trust no inflation number is given anyways, and the table has an asterisk that says “NOMINAL AFTER TAX RETURNS” so we know what wer are analyzing. If answering I would have ignored the e(inf) number for the personal assets and only used the expected inflation number.