It was in the PM CFAI mock.
The question was to calculate inflation-adjusted return. All my life “inflation-adjusted” was a synonym for “real”, so I didn’t add inflation and was wrong. Should I conclude that this rule doesn’t work on CFA Level III exam?
I’m assuming you mean Q17 of the Sunnydale example? This also had me doubting myself.
Everywhere else in the curriculum (and in real life for that matter), “inflation-adjusted” always means “real”, i.e. do not add inflation, so I can only assume that this is just either really poor wording or simply a wrong answer. I would consider writing to the CFAI but I’ve got bigger things to worry about and I’m almost certain they are wrong. If you check the Glossary at the back of Volume 2 of the curriculum it states:
“Total Return - the rate of return taking into account capital appreciation/depreciation and income. Often qualified as follows: Nominal returns are unadjusted for inflation; real returns are adjusted for inflation…”
So I wouldn’t worry too much. Apparently one of the other questions on this item-set was a bit dubious too (quoted a justification in the answer that was nowhere to be seen in the text) so I think it was just a pretty badly put together question all round.