1. Assume that last year, Isaac earned 13.6 percent on his investments while U.S. Treasury bills yielded 2.7 percent, and the inflation rate was 2.2 percent. What real rate of return did he earn on his investments last year?
A) 10.39 percent
B) 11.63 percent
C) 12.24 percent
D) 13.56 percent
E) 11.15 percent
2. You own a portfolio of two stocks, A and B. Stock A is valued at $84,650 and has an expected return of 10.6 percent. Stock B has an expected return of 6.4 percent. What is the expected return on the portfolio if the portfolio value is $97,500?
A) 10.09 percent
B) 10.05 percent
C) 9.99 percent
D) 9.62 percent
E) 9.74 percent