Real: Difference between revisions
imported>Doug Williamson m (Spacing 20/8/13) |
imported>Doug Williamson m (Add space between "10%" and "and".) |
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A term which has been restated to exclude the effects of inflation. | A term which has been restated to exclude the effects of inflation. | ||
For example, if £100 is invested for a year at a nominal rate of 10%and inflation is 2%, we can say that the nominal rate is 10% but the real rate is only (1.10/1.02) - 1 = 7.84%. This is because goods which cost £100 today will cost £102 in a year's time. | For example, if £100 is invested for a year at a nominal rate of 10% and inflation is 2%, we can say that the nominal rate is 10% but the real rate is only (1.10/1.02) - 1 = 7.84%. This is because goods which cost £100 today will cost £102 in a year's time. | ||
Therefore only a 7.84% return has been made if we take into account the new prices of goods. | Therefore only a 7.84% return has been made if we take into account the new prices of goods. | ||
Revision as of 17:22, 13 July 2014
1.
A term which has been restated to exclude the effects of inflation.
For example, if £100 is invested for a year at a nominal rate of 10% and inflation is 2%, we can say that the nominal rate is 10% but the real rate is only (1.10/1.02) - 1 = 7.84%. This is because goods which cost £100 today will cost £102 in a year's time.
Therefore only a 7.84% return has been made if we take into account the new prices of goods.
2.
Inflation-proof.
3.
Tangible. For example the real assets of a business would include its stock, plant and machinery.
4.
Real property means land and buildings.
5.
Real-life issues and opportunities are those with a strong foundation in practical experience.
(Contrasted with other issues which are considered to be more theoretical.)
6.
Options. Relating to an operational decision or outcome.
7.
Economics. Referring to the part of the total economy which excludes financial markets and financial services.
