2. Over the last nine years, you have earned the following returns on theNZX

YearReturn

(ending in March) 2013201417.45%

2014201515.17%

2015201617.26%

201620177.94%

2017201816.92%

2018201919.54%

201920200.36%

2020202128.93%

20212022-5.17%

You have also collected the level of the CPI over the same period:

Date Level

March 2013 958

March 2014 972

March 2015 975

March 2016 979

March 2017 1000

March 2018 1011

March 2019 1026

March 2020 1052

March 2021 1068

March 2022 1142

(a) For each tax year, calculate the inflation rate.

(b) Now calculate a real rate of return for the NZX50 (use the full for-mula, not the approximation) for each year.

(c) What is the mean nominal return for the NZX50? What is the meanreal return?

(d) What is the nominal volatility for the NZX50? What is the realvolatility of the NZX50?

(e) Suppose New Zealand had a 33% tax levied on capital gains and alldividends. Repeat your analysis, calculating after-tax mean real andnominal returns, along with real and nominal after-tax volatilities.