{"id":57752,"date":"2024-04-16T01:07:27","date_gmt":"2024-04-16T01:07:27","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=57752"},"modified":"2024-04-16T01:07:27","modified_gmt":"2024-04-16T01:07:27","slug":"the-return-relative-solves-the-problem-of______________","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-return-relative-solves-the-problem-of______________\/","title":{"rendered":"The return relative solves the problem of______________."},"content":{"rendered":"

[amp_mcq option1=”inflation” option2=”negative returns” option3=”interest rates” option4=”tax differences” correct=”option1″]<\/p>\n

The correct answer is: A. inflation.<\/p>\n

A return relative is a measure of the performance of an investment relative to a benchmark. It is calculated by dividing the investment’s return by the benchmark’s return. A return relative of 1 indicates that the investment has performed the same as the benchmark. A return relative of greater than 1 indicates that the investment has outperformed the benchmark, and a return relative of less than 1 indicates that the investment has underperformed the benchmark.<\/p>\n

Inflation is a general increase in prices and a decrease in the purchasing value of money. When inflation is high, it can erode the returns on investments. A return relative can help to mitigate the effects of inflation by measuring the performance of an investment relative to a benchmark that is adjusted for inflation.<\/p>\n

The other options are incorrect because:<\/p>\n