Chapter 12, page 343, P6 Find the real return on the following investments. STOCK NOMINAL RETURN INFLATION A 10% 3% B 15% 8% C – 5% 2% Stock A- 10%-?%=?% Stock B- 15%-?%=?% Stock C- 5%-?%=?% Chapter 12, page 343, P8 8. The countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bond, and short-term government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato’s securities? From investing in Variato’s securities? STABILATO ASSET AVERAGE RETRUN STAVDARD DEVIATION 95% Range Average +1/-2) Stocks 8% 3% 41 -11 Bonds 5% 2% ? ? Short-term government debt 3% 1% ? ? VARIATO                             AVERAGE                           STANDARD 95% range ASSET                                   RETURN                            DEVIATION (average +1/-2) Stocks                                     15%                                           13% 41 -11 Bonds                                      10%                                            8% ? ? Short- term government debt   6%                                             3%  ? ? .

1. Chapter 12, page 343, P6
Find the real return on the following investments.
STOCK
NOMINAL RETURN
INFLATION
A
10%
3%
B
15%
8%
C
– 5%

2. 2%
Stock A- 10%-?%=?%
Stock B- 15%-?%=?%
Stock C- 5%-?%=?%
Chapter 12, page 343, P8
8. The countries of Stabilato and Variato have the following
average returns and standard deviations for their stocks, bond,
and short-term government securities. What range of returns
should you expect to earn 95 percent of the time for each asset
class if you invested in Stabilato’s securities? From investing in
Variato’s securities?
STABILATO ASSET
AVERAGE RETRUN
STAVDARD DEVIATION
95% Range
Average +1/-2)
Stocks

3. 8%
3%
41
-11
Bonds
5%
2%
?
?
Short-term government debt
3%
1%
?
?
VARIATO AVERAGE
STANDARD
95% range
ASSET RETURN

4. DEVIATION
(average +1/-2)
Stocks 15%
13%
41
-11
Bonds 10%
8%
?
?
Short- term government debt 6%
3%
?
?