Why do investors need to pay attention to real returns, as well as nominal returns?
Answer to relevant QuestionsIn Table, why are the average real returns lower than the average nominal returns for each asset class? Is it always true that an assets nominal return is higher than its real return? Look at Figure. The unlabeled dot on the far right of the graph represents the average return and standard deviation of Advanced Micro Devices. Down and to the left from that point you can see the position of American ...The table below shows annual returns on the pharmaceutical leader Merck and chip maker Advanced Micro Devices. The last column of the table shows the annual return that a portfolio invested 50% in Merck and 50% in AMD would ...Why should stock betas and expected returns be related, while no such relationship exists between stock standard deviations and expected returns? Describe the scale problem and the timing problem and explain the potential effects of these problems on the choice of mutually exclusive projects, using IRR versus NPV.
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