B
Brett Kim
Member
The question on page 31 of chapter 12 asks us to calculate the money yield given an inflation rate of 5% p.a. and spending of $100,000 at the outset, with an expected return of $110,000 in one year's time.
The solution to (i) calculates the present value of $110,000 inflated by 5%, giving a money yield of 15.5% p.a.
However, I thought the money yield was the yield that didn't include the effect of inflation? Hence the money yield is simply 10%?
The solution to (i) calculates the present value of $110,000 inflated by 5%, giving a money yield of 15.5% p.a.
However, I thought the money yield was the yield that didn't include the effect of inflation? Hence the money yield is simply 10%?