Question
Calculate the dollar rates of return on the following assets: (a) A painting whose price rises from $200, 000 to $250, 000 in a year.
Calculate the dollar rates of return on the following assets:
(a) A painting whose price rises from $200, 000 to $250, 000 in a year.
(b) A bottle of a rare Burgundy, Domaine de la Romanee-Conte 2011, whose price rises from $255 to $275 between 2013 and 2014.
(c) A 10, 000 deposit in a London bank in a year when the interest rate on pounds is 10 percent and $/ exchange rate moves from $1.50 per pound to $1.38 per pound.
What would be the real rates of return on the assets if the price changes described were accompanied by a simultaneous 10 percent increase in all dollar prices?
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