Real
Real is a term used in finance to refer to the actual value of an asset or liability, as opposed to its nominal or book value. It is the value of an asset or liability in terms of its purchasing power, taking into account inflation and other economic factors. Real values are used to compare the value of an asset or liability over time, and to compare the value of different assets or liabilities.
History of Real
The concept of real value has been around since the early days of economics. In the 18th century, the Scottish economist Adam Smith wrote about the importance of taking into account the effects of inflation when evaluating the value of an asset or liability. Since then, the concept of real value has been used in various economic theories and models, including the theory of purchasing power parity.
Comparison Table
| Asset/Liability | Nominal Value | Real Value |
|---|---|---|
| House | $200,000 | $150,000 |
| Car | $20,000 | $15,000 |
| Bond | $10,000 | $8,000 |
Summary
Real is a term used in finance to refer to the actual value of an asset or liability, taking into account inflation and other economic factors. It is used to compare the value of an asset or liability over time, and to compare the value of different assets or liabilities. For more information on real value, you can visit websites such as Investopedia and The Balance.
See Also
- Nominal Value
- Purchasing Power Parity
- Inflation
- Interest Rate
- Exchange Rate
- Real Interest Rate
- Real Exchange Rate
- Real GDP
- Real Wage
- Real Return
