The Market Portfolio of Common Stocks Earned 14

question 4

Multiple Choice

The market portfolio of common stocks earned 14.7% last year. Treasury bills earned 5.7% on average last year. The average inflation rate was 4.0%. What was the real return on equities?

• A) 5.0%.
• B) 9.0%.
• C) 9.7%.
• D) 10.7%.
• E) 12.6%.