Compute the real rates of return

Reference no: EM1344316

1-At the beginning of last year, you invested $4,000 in 80 shares of the Chang Corporation. During the year, Change paid dividends of $5 per share. At the end of the year, you sold the 80 shares for $59 per share. Compute your total HPY on these shares and indicate how much was due to the price change and how much was due to the dividend income.

2-The rates of return computed in Problems 1 are nominal rates of return. Assuming that the rate of inflation during the year was 4 percent, compute the real rates of return on these investments. Compute the real rates of return if the rate of inflation was 8 percent.

Reference no: EM1344316

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