A Major Difference Between Real and Nominal Returns Is That

question 42

Multiple Choice

A major difference between real and nominal returns is that:

• A) real returns adjust for inflation, and nominal returns do not.
• B) real returns use actual cash flows, and nominal returns use expected cash flows.
• C) real returns adjust for commissions, and nominal returns do not.
• D) real returns show after-tax returns, and nominal returns show before-tax returns.

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Definitions:

Aquifers

Underground layers of water-bearing permeable rock or materials through which groundwater can be extracted using a well.

Renewable Natural Resources

Things such as forests, water in reservoirs, and wildlife that are capable of growing back or building back up (renewing themselves) if they are harvested at moderate rates.

Natural Capital

The world's stock of natural resources, including geology, soils, air, water, and all living organisms, which provide goods and services that support the economy and life.

Nonrenewable Natural Resource

Things such as oil, natural gas, and metals, that are either in actual fixed supply or that renew so slowly as to be in virtual fixed supply when viewed from a human time perspective.