Asked by Vanessa Pressat on Jun 13, 2024
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An investor's portfolio increased in value from $35,645 to $54,230 over a six-year period. At the same time, the Consumer Price Index rose by 26.5%. What was the portfolio's annually compounded real rate of return?
Consumer Price Index
A gauge that calculates the mean variation in time of the prices urban consumers pay for a selection of consumer products and services.
Real Rate of Return
The annual percentage return realized on an investment, adjusted for changes in price due to inflation or other external effects.
Portfolio Value
The total worth of all the financial investments held by an individual or institution.
- Analyze and compute the real rate of return on an investment, accounting for inflation.
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Learning Objectives
- Analyze and compute the real rate of return on an investment, accounting for inflation.