nominal return(redirected from Continuously compounded nominal and real returns)
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The rate of return on an investment without adjusting for inflation. It is calculated simply by taking the dollar amount of the return and comparing it to the amount invested. A high nominal return does not guarantee a real profit. For example, if the nominal return on an investment is 7% and the inflation rate is 4%, the real rate of return is only 3%.
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The rate of return on an investment without adjustment for inflation. While nominal return is useful in comparing the returns from different investments, it can be a very misleading indication of true investor earnings on an investment. Compare real return.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.