A client's bond portfolio earns a nominal return of 5% during a year when the Canadian Consumer Price Index (CPI) increases by 6%. What is the client's approximate real return for the year?

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Accepted Answer

The real return is calculated by subtracting the inflation rate from the nominal return (5% - 6% = -1%).

A client's bond portfolio earns a nominal return of 5% during a year when the Canadian Consumer Price Index (CPI) increases by 6%. What is the client's approximate real return for the year?

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