Which statement best describes nominal return?

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Multiple Choice

Which statement best describes nominal return?

Explanation:
Nominal return is the return expressed in current money terms before accounting for inflation. It shows the raw percentage gain or loss from an investment without removing changes in purchasing power. For example, if inflation is 3% and you earn 5%, the nominal return is 5%, while the real return (inflation-adjusted) is about 2%. The nominal return and the real return are the same only if inflation is zero. The other statements describe inflation-adjusted return or relate to conditions not defining nominal return, so they don’t fit.

Nominal return is the return expressed in current money terms before accounting for inflation. It shows the raw percentage gain or loss from an investment without removing changes in purchasing power. For example, if inflation is 3% and you earn 5%, the nominal return is 5%, while the real return (inflation-adjusted) is about 2%. The nominal return and the real return are the same only if inflation is zero. The other statements describe inflation-adjusted return or relate to conditions not defining nominal return, so they don’t fit.

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