Question
Consider these long-term investment data: --The price of a 10-year $100 face value zero-coupon inflation-indexed bond is $84.49. -- A real-estate property is expected to
Consider these long-term investment data:
--The price of a 10-year $100 face value zero-coupon inflation-indexed bond is $84.49.
-- A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%.
a. Use the formula in footnote 14 and Excels Solver or Goal Seek to find the standard deviation of the continuously compounded annual excess return on the real-estate investment.
b. What is the probability of loss or shortfall after 10 years
(DO NOT COPY THE ONLINE ANSWERS A IS NOT 1.7 AND B IS NOT 3.51 THIS ANSWERS FOR ANOTHER QUISTIONS )
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