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Question: calculate the annual inflation rate betweenandnbsp30th june 1975andnbspwhen the consumer...

Question details
Calculate the annual inflation rate between 30th June 1975 when the consumer price index (CPI) was 15.8 and 30th June 1997 when the CPI was 66.9. Note that you should find the annual CPI inflation rate between these dates.
 
Select one:
a.

-33.1% pa

b.

6.4758% pa

c.

6.7799% pa

d.

7.114% pa

e.

82.7% pa

 

Part B

An investor bought a stock for $13 (at t=0) and one year later it paid a $2 dividend (at t=1). Just after the dividend was paid, the stock price was $7 (at t=1). Inflation over the past year (from t=0 to t=1) was 4% pa, given as an effective annual rate. Which of the following statements is NOT correct? The stock investment produced a:

Select one:
a.

Nominal capital return of -33.431953% pa.

b.

Nominal income return of 15.384615% pa.

c.

Real capital return of -48.224852% pa.

d.

Real income return of 14.792899% pa.

e.

Real total return of -33.431953% pa.

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