Advanced English Dialogue for Business – Real gain or loss

Listen to a Business English Dialogue About Real gain or loss

Isabella: Hi Eden, do you know what a real gain or loss is?

Eden: No, I’m not sure. Could you explain?

Isabella: Sure! A real gain or loss refers to the increase or decrease in the purchasing power of an investment after adjusting for inflation.

Eden: Oh, I see. So, it’s like measuring how much the investment’s value has changed in terms of what it can actually buy?

Isabella: Exactly! It’s important to consider real gain or loss because it gives a more accurate picture of the investment’s performance relative to changes in the overall price level.

Eden: That makes sense. So, how do you calculate real gain or loss?

Isabella: To calculate real gain or loss, you subtract the rate of inflation from the nominal gain or loss of the investment.

Eden: I see. So, if the real gain is positive, does that mean the investment outpaced inflation?

Isabella: Yes, that’s correct. A positive real gain indicates that the investment’s value increased in real terms, meaning it maintained or enhanced purchasing power.

Eden: And if the real gain is negative?

Isabella: If the real gain is negative, it means that the investment’s value decreased in real terms, failing to keep up with inflation.

Eden: Got it. So, it’s essential to consider both nominal and real gains when evaluating investment performance?

Isabella: Absolutely. Real gain or loss provides a more accurate assessment of an investment’s actual purchasing power over time.

Eden: Thanks for explaining, Isabella.

Isabella: No problem, Eden. Understanding real gain or loss can help investors make more informed decisions about their investments.