Determining real rate from nominal rate


1) Compute the expected returns of your portfolio

Stock  Invest   Exp Ret
 A      $318       7.6%
 B      $790       17.1%
 C      $1,929     21.9%

2) You have observed the returns on XYZ’s stocks over the last 5 years which are given below:

4.6%, 9.2%, -11.6%, 10.8%, -4.3%

Determine the geometric average returns on the stock over this 5-year period.

3) Assume nominal rate is= 9.21% and inflation rate is= 4.26%. Answer for the real rate.

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Finance Basics: Determining real rate from nominal rate
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