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Homework answers / question archive / You purchase 125 shares of stock for $51 a share
You purchase 125 shares of stock for $51 a share. The stock pays a $3 per share dividend at year-end. What is the rate of return on your investment for these end-of-year stock prices? What is your real (inflation-adjusted) rate of return? Assume an inflation rate of 4%. (Round your answers to 2 decimal places. Use the minus sign for negative numbers if it is necessary.)
a. ?nd-of-year stock price = $47
What is the Rate of return = ?
What is the Real rate = ?
b. ?nd-of-year stock price = $51
What is the rate of return =?
What is the real rate =?
c. ?nd-of-year stock price = $54
What is the rate of return?
What is the real rate ?
Answer
a) rate of return = -1. 96%
Real rate = -5. 73%
b) Rate of return = 5.88%
Real rate = 1.81%
c) Rate of return = 11.76%
Real Rate = 7.46%
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