Question
During the past year, you had a portfolio that contained U.S. government T-bills, long-term government bonds, and common stocks. The rates of return on each
During the past year, you had a portfolio that contained U.S. government T-bills, long-term government bonds, and common stocks. The rates of return on each of them were as follows:
U.S. government T-bills | 4.90 | % |
U.S. government long-term bonds | 6.70 | |
U.S. common stocks | 8.50 |
During the year, the consumer price index, which measures the rate of inflation, went from 100 to 115 (1982 1984 = 100). Compute the rate of inflation during this year. Round your answer to one decimal place.
%
Compute the real rates of return on each of the investments in your portfolio based on the inflation rate. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to two decimal places.
Real rate of return | |
U.S. government T-bills | % |
U.S. government long-term bonds | % |
U.S. common stocks | % |
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