Your share portfolio has an expected nominal total return of 9% pa and a nominal capital return of 6% pA. Inflation is expected to be 3% pA.All of the above rates are nominal effective rates and investors believe that they will stay the same in perpetuity. Which of the following statements is NOT correct?


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The real expected capital return is 2.9126%pa.


The real expected total return is 5.8252% pa.


The real expected dividend return is -0.0848% pa.


If today’s share price is $10, in one year, the nominal price will be $10.60 and the real price will be $10.29.


Following on from above, $10.29 will buy the same amount of goods and services now as $10.60 will buy in 1 year.


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