What was her real rate of return on this investment

Reference no: EM13190962

Suppose Jean Splicer, an investor, buys $100,000 of shares of stock in a diversified bundle of Bio-tech firms and exactly one year later sells those shares for $108,000. If the value of the CPI at the date of Jean's purchase was 160, and rose by the sale date one year later to 168, what was her real rate of return on this investment?

B) Why is it appropriate to use the CPI instead of the Gross Domestic Product Deflator in calculating the "real" rate of return in this example?

Reference no: EM13190962

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