quant

CFA Level I
#21

Cfaisok, I think its 18%.

#22

18% is my call

#23

Forget CFAi, you all write WAY better exam questions!

#24

@ amber A question like this was on mock… @the others Does anybody have a source? I am pretty sure, that if someone talks about opportunity cost, he is meaning nominal rates. Why don’t you adjust for inflation? (like in volume 1 page 173) I don’t understand.

#25

Opportunity cost includes inflation by definition. In that case, why don’t you also ask why not adjust for risk and liquidity, etc.? You don’t because that’s all included. What you are referring to is a situation in which a change of inflation rate is given, and you are asked to adjust the opportunity cost. That’s just for problem practice purposes…my $0.02.

#26

Dreary Wrote: ------------------------------------------------------- > Opportunity cost includes inflation by definition. > > > In that case, why don’t you also ask why not > adjust for risk and liquidity, etc.? You don’t > because that’s all included. What you are > referring to is a situation in which a change of > inflation rate is given, and you are asked to > adjust the opportunity cost. That’s just for > problem practice purposes…my $0.02. Totally agree with you Dreary! however I was just wondering, there should be a paper (even accademic) where they confirm this!?

#27

Thanks dreary for your reply and for reading my cited page. So opportunity cost is a real measure? Where do you find that in CFA-books?

#28

Thought about it a long time, now. Since the cash flows are nominal (they include inflation), which i discount, the discount rate has to be nominal, too. You are right guys with the answer “18 %”, but not with explanation… Or am i wrong?