In economics, a nominal value is an economic value expressed in dollar terms.
A real value is a value expressed in dollars adjusted for purchasing power. In other words a value adjusted for inflation and deflation so that the real purchasing power is held constant.
A person earns $100,000 in one year and $103,000 in the next year. Inflation was 3% in the second year.
The nominal earnings were $100,000 and $103,000. The real earnings, or purchasing power held constant earnings, are $100,000 in both years.
In finance risk is defined as uncertainty that is consequential (nontrivial).
| The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.