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You purchase 100 shares of stock for $40 a share

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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) $44

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.)