1. Tina earned 9.8 percent on her investments last year while U.S. Treasury bills yielded 3.1 percent and the inflation rate was 4.2 percent. What real rate of return did she earn on her investments last year?  

A. 2.50 percent

B. 5.60 percent

C. 6.70 percent

D. 8.70 percent

E. 10.90 percent

2. Taggart Inc.'s stock has a 50% chance of producing a 21% return, a 30% chance of producing a 10% return, and a 20% chance of producing a -28% return. What is the firm's expected rate of return?

1. 7.90%

2. 9.72%

3. 9.88%

4. 8.37%

5. 7.82%