The Costaguana stock market provided a rate of return of 93%. The inflation rate in Costaguana during the year was 80%. In Ruritania the stock market return was 13%, but the inflation rate was only 4%. a. Calculate the real rate of return for Costaguana stock market? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. Calculate the real rate of return for Ruritania stock market? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. Which country's stock market provided the higher real rate of return? Real rate of return for Costaguana stock market b. Real rate of return for Ruritania stock market c. Higher real rate of return % %

The Costaguana stock market provided a rate of return of 93%. The inflation rate in Costaguana during the year was 80%. In Ruritania the stock market return was 13%, but the inflation rate was only 4%. a. Calculate the real rate of return for Costaguana stock market? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. Calculate the real rate of return for Ruritania stock market? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. Which country's stock market provided the higher real rate of return? Real rate of return for Costaguana stock market b. Real rate of return for Ruritania stock market c. Higher real rate of return % %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Costaguana stock market provided a rate of return of 93%. The inflation rate in Costaguana during the year was 80%. In Ruritania the stock market return was 13%, but the inflation rate was only 4%. Calculate the real rate of return for Costaguana stock market? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Calculate the real rate of return for Ruritania stock market? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Which country's stock market provided the higher real rate of return?
Compute the real rates of return for the following situations assuming that the inflation rate is 2 percent. Compute the real rates of return if the rate of inflation was 9 percent. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to one decimal places. a. On February 1, you bought 90 shares of stock in the Francesca Corporation for $30 a share and a year later you sold it for $33 a share. During the year, you received a cash dividend of $1.70 a share. Real rate of return at 2%: % Real rate of return at 9%: b. On August 15, you purchased 100 shares of stock in the Cara Cotton Company at $41 a share and a year later you sold it for $35 a share. During the year, you eceived dividends of $3.00 a share. Real rate of return at 2%: % % Real rate of return at 9%: c. At the beginning of last year, you invested $4,950 in 90 shares of the Chang Corporation. During the year, Chang paid dividends of $3.00 per share. At the end of the…
A stock had a return of 6.8 percent last year. If the inflation rate was 1.2 percent, what was the approximate real return? (Enter your answer as a percent rounded to 1 decimal place.)
You've observed the following returns on Pine Computer's stock over the past five years: 8 percent, -12 percent, 14 percent, 21 percent, and 16 percent. The average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1 percent. a. What was the average real return on the stock? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What was the average nominal risk premium on the stock? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Average real return b. Average nominal risk premium % %
Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The following table shows the nominal returns on Brazilian stocks and the rate of inflation. a. What was the standard deviation of the market returns? (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. b. Calculate the average real return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places) Answer is complete but not entirely correct. The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year Nominal Return (%) Inflation (%) 2012 0.1 7.3 2013 -18.0 7.4 2014 -16.0 7.9 2015 -42.9 12.2 2016 2017 67.7 28.4 7.8 4.4 a. What was the standard deviation of the market returns? (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2…
The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year Nominal Return (%) 2012 0.1 -15.0 -13.0 2013 2014 2015 2016 2017 -43.4 68.2 28.9 Standard deviation a. What was the standard deviation of the market returns? (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Inflation (%) 7.8 7.9 8.4 12.7 8.3 4.9 Averano real return % b. Calculate the average real return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places) %
You've observed the following returns on Bennington Corporation's stock over the past five years: 13 percent, -8 percent, 16 percent, 16 percent, and 10 percent. Suppose the average inflation rate over this period was 1.5 percent and the average T-bill rate over the period was 5 percent. a. What was the average real risk-free rate over this time period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the average real risk premium? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Average real risk-free rate b. Average real risk premium % %
The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year Nominal Return (%) Inflation (%) 7.5 2015 2016 0.5 -16.0 2017 -14.0 2018 -43.1 2019 67.9 2020 28.6 7.6 8.1 12.4 8.0 4.6 a. What was the standard deviation of the market returns? Note: Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. Calculate the average real return. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. a. Standard deviation b. Average real return % %
The rates of return on Cherry Jalopies, Inc., stock over the last five years were 23 percent, 11 percent, -5 percent, 7 percent, and 10 percent. What is the geometric return for Cherry Jalopies, Inc.? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Geometric return %
The rates of return on Cherry Jalopies, Inc., stock over the last five years were 18 percent, 11 percent, −1 percent, 2 percent, and 11 percent. What is the geometric return for Cherry Jalopies, Inc.? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time 1 2 3 12 4 14 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Asman $9 11 Salinas $30 27 32 36 The rate of return you would have earned on Asman stock from time 1 to time 2 is %. (Round to two decimal places.)

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