Reading 10 - IPS - How to deal with inflation
The question I have is in regard to Christa’s return requirement; this is in reading 10, questions 1-8.
Christa’s expected return for the portfolio is said to be €82,500, which in the solution is said to include inflation. However, it says her expenses will be €100,000 (or €50,000 more than art sales) which the solution assumes does not include inflation.
How are we to know if a number includes inflation or not? In other words, why are we to assume that her investment return includes inflation and her expenses do not include inflation? |