I would appreciate a better explanation on how to get the answer with these 2 qu

Question

I would appreciate a better explanation on how to get the answer with these 2 questions.  I have been back and forth through the book and it has been very confusing.  Thanks for the help

Chapter 12

P6 -Find the real return on the following investments:

Stock

Nominal Return

Inflation

A

10%

3%

B

15%

8%

C

-5%

2%

P8: The countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bond, and short-term government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato

  

Stock

     

Nominal Return

     

Inflation

     

     

A

     

10%

     

3%

     

     

B

     

15%

     

8%

     

     

C

     

-5%

     

2%

     

   I would appreciate a better explanation on how to get the answer with these 2 questions. I have been back and forth through the book and it has been very confusing. Thanks for the help P6 -Find the real return on the following investments: P8: The countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bond, and short-term government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato's securities? From investing in Variato's securities?

Explanation / Answer

P-8 The countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bond, and short-term government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato's securities? From investing in Variato's securities?

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