(a) A certain equity pays annual dividends. An investor purchases a number of shares in this equity just after a dividend has been made. The current share price is 1. The next dividend amount due is d per unit share holding. If dividends are expected to grow at a compound rate of g per annum and price inflation is expected to operate at a compound rate of e per annum, show that the real rate of return will be: 1 + e Assume that the equity is held indefinitely (b) In a certain country which uses pounds as its national currency price inflation has been running at 15% p.a. for the last few years. Caleulate the average real rate of return p.a. for an investment purchased on 1/2/2015 for 1.000 and sold on 1/8/2015 for 750