Problem $1-09$

During the past year, you had a portfolio that contained U$.$S$.$ government T$-$bills, long$-$term government bonds, and common stocks. The rates of return

on each of them were as follows:

U$.$S$.$ government T$-$bills

U$.$S$.$ government long$-$term bonds

U$.$S$.$ common stocks

$3\mathrm{.}50\%$

$4\mathrm{.}60$

$7\mathrm{.}10$

During the year, the consumer price index, which measures the rate of inflation, went from $100$ to $111(1982-1984=100).$ Compute the rate of

inflation during this year. Round your answer to one decimal place.

$\%$

Compute the real rates of return on each of the investments in your portfolio based on the inflation rate. Use a minus sign to enter negative values, if

any. Do not round intermediate calculations. Round your answers to two decimal places.

U$.$S$.$ government T$-$bills

Real rate of return

U$.$S$.$ government long$-$term bonds

$\%$

U$.$S$.$ common stocks

$\%$

$\%$