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Explain real rate of return in the stock market

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Reference no: EM13176568

Suppose that you lend 1,000 to a friend and your friend pay you back 1,100 the nnext year.

Suppose the price that year rose by 8% and the real rate of return in the stock market was 4%.

Your friend says she or he was being more than fair giving you more than the rate of inflation as a return, What do you think and Why?

Reference no: EM13176568

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