1. You just sold a stock that you originally purchased 10 years ago. The 10 year holding period return on the stock was 60 percent. During the past 10 years the cumulative inflation rate has been 30 percent. Your real/inflation-adjusted return on the stock for the 10 years was ____________, and the real compound annual return was ________
a. 30.00%; 3.00%. b. 23.10%; 2.10%. c. 50.00%; 4.14%. d. 60.00%; 6.00%.
2. Consider two bonds identical in all respects except maturity. Bond A has a maturity of three years while Bond B has a maturity of 15 years.
A. Bonds A and B will have the same interest rate risk.
B. Bond A will have less interest rate risk than bond B
C. Bond A will have greater interest rate risk than Bond B
D. None of the above.