Calculate the average real return.

Calculate the average real return.

The following table shows the nominal returns
on U.S. stocks and the rate of inflation. a. What was the standard deviation of the
market returns?

b. Calculate the average real return.

Year Nominal Return (%) Inflation (%)

2004 +12.5 +3.3

2005 +6.4 +3.4

2006 +15.8 +2.5

2007 +5.6 +4.1

2008 -37.2 +0.1


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