# Question: Explain why you would change your nominal required rate of

Explain why you would change your nominal required rate of return if you expected the rate of inflation to go from 0 (no inflation) to 4 percent. Give an example of what would happen if you did not change your required rate of return under these conditions.

## Answer to relevant Questions

Assume the expected long-run growth rate of the economy increased by 1 percent and the expected rate of inflation increased by 4 percent. What would happen to the required rates of return on government bonds and common ...At the beginning of last year, you invested $4,000 in 80 shares of the Chang Corporation.During the year, Chang paid dividends of $5 per share. At the end of the year, you sold the 80 shares for $59 a share. Compute your ...What would your required rate of return be on common stocks if you wanted a 5 percent risk premium to own common stocks given what you know from Problem 10? If common stock investors became more risk averse, what would ...Why is a policy statement important?Assume that the rate of inflation during all these periods was 3 percent a year. Compute the real value of the two tax-deferred portfolios in problems 4a and 5a.Post your question