Fin 310 Ch 4 Open-Ended Assignment

The expected return on a share of ExxonMobil stock in the U.S. is 7.6% while the expected return on a share of Royal Dutch Shell stock is 8.8% in the Netherlands. The pure rate of return is 2% in both countries and the risk premium is 3% for each company's stock. Required: A. What is the long-term expected inflation rate in the U.S. If the multiplicative form of the Fisher model is used in making the calculation? (Please carry your final answers out to 2 decimal places.) B. What is the long-term expected inflation rate in the Netherlands, if the multiplicative form of the Fisher model is used in making the calculation? (Please carry your final answers out to 2 decimal places.) Your answers to this open-ended assignment should be placed in the space below this line. A B