USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 65

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume that during the past year the consumer price index increased by 1.5 percent and the securities listed below returned the following nominal rates of return.

-Refer to Exhibit 1.5. What are the real rates of return for each of these securities?

• A) 4.29% and 6.32%
• B) 1.23% and 4.29%
• C) 3.20% and 6.32%
• D) 1.23% and 3.20%
• E) 3.75% and 5.75%

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Definitions:

Expenses

The costs incurred by a business or individual in the process of earning revenue, including operational and administrative costs.

Distribution

The process of making a product or service available for use or consumption by a consumer or business user, using direct or indirect means.

Economy of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Small Manufacturers

Companies engaged in the production of goods on a smaller scale, often characterized by more specialized products or services.