What is your real rate of return

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Reference no: EM131456237

You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end.

a. What is the rate of return on your investment if the end-of-year stock price is (i) $38; (ii) $40; (iii) $46? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.)

Stock price   Rate of return

$38 0 %

$40 5 %

$46 20 %

b. What is your real (inflation-adjusted) rate of return if the inflation rate is 3%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.)

Stock price   Real rate of return

$38 %

$40 %

$46 %

Reference no: EM131456237

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