Nominal vs Real Rate of Return | Inflation-Adjusted Return on Investments | Concepts by Yadnya

In finance and economics, nominal rate refers to the rate before adjustment for inflation (in contrast with the real rate). The real rate is the nominal rate minus inflation.
Real rate of return can indeed be negative. When real rate of return are negative, it means that the inflation rate is larger than the nominal interest rate. Measuring the real rate of return lets investors determine if they are actually making money and growing purchasing power on an investment. If the real rate of return is not larger than inflation, the investor is losing money.

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[pragnachothani]

Thank you for explaining it so easily.

[AadityaAGSuperboy]

Are Reat rate and Effective Rate same?

[sriram]

Idk why but the definition you're teaching vs what the cfa institute teaches are total opposites . Why is that ?