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    Excpected rate of inflation

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    You are given the following long-run annual rates of return for alternative investments:

    U.S. Gov't T-bills 3.75%
    Large-cap common stock 12.45%
    Long-term corporate bonds 6.15%
    Long-term Gov't bonds 5.15%
    Small-capitalization common stock 14.20%

    The annual rate of inflation is 3.5%. What is the real rate of return (hint: use formula on page 17)

    The annual rate of inflation is 3.5% what is the rate of return

    Hint : USE FORMULA

    NRFE=(1+RRFR)X(1+EXPECTED RATE OF INFLATION)-1

    RRFR=(1+NRFR OF RETURN)/(1+NRFR OF RETURN)-1

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    https://brainmass.com/business/finance/excpected-rate-inflation-263008

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    The expected rate of return for alternative investments are examined.

    $2.19

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