USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 22

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the following information
Nominal annual return on U.S. government T-bills for year 2018 = 3.5%
Nominal annual return on U.S. government long-term bonds for year 2018 = 4.75%
Nominal annual return on U.S. large-cap stocks for year 2018= 8.75%
Consumer price index January 1, 2018 = 165
Consumer price index December 31, 2018 = 169
-Refer to Exhibit 1.10. Calculate the annual real rate of return for U.S. large-cap stocks.

• A) 7.06%
• B) 6.18%
• C) 4.75%
• D) 3.75%
• E) 0%

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Definitions:

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Confidential business information which provides an enterprise a competitive edge, and which is protected from disclosure by law.

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A type of cord traditionally made from the natural fibers found in the intestines of sheep and other animals, used for surgical sutures and musical instrument strings.