1O. Last year, you earned a rate of eturn of 1237 percent on you inflation rate

Question

1O. Last year, you earned a rate of eturn of 1237 percent on you inflation rate was 3.6 percent. What was your real rate of return? " bond investments. During that time, the A. 6.30 percent B. 7.60 percent C. 7.75 percent D. 8.47 percent E. 8.70 percent 11. A broker is an agent who A. trades on the floor of an exchange for himself or herself. B. buys and sells from inventory C. offers new securities for sale to dealers only D. is ready to buy or sell at any time E. brings buyers and sellers together

Explanation / Answer

10)
As per Fisher's Theory,
( 1 + Nominal Return) = (1+ Real Return)(1+Inflation)
( 1 + 12.37%) = (1+ Real Return)(1+3.6%)
(1+ Real Return)= ( 1 + 12.37%) /(1+3.6%)
Real Return= (1.1237 / 1.036) - 1
Real Return= 1.0847 - 1
Real Return= 0.0847
Real Return= 8.47 %

11)
E. Brings Buyers & Sellers together
Broker is an intermediary who arranges commercial transactions between a buyer and a seller for a commission. He neither buys or sell in his own name

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