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FinanceQ&A Libraryou purchase 100 shares of stock for $50 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) $48; (ii) $50; (iii) $54? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.) Rate of Return48 50 54 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.) Real rate of Return485054Question

Asked Feb 11, 2020

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ou purchase 100 shares of stock for $50 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) $48; (ii) $50; (iii) $54? **(Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.)**

Rate of Return

48

50

54

**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.)**

** Real rate of Return**

**48**

**50**

**54**

1 Rating

Step 1

a.

The below expression can be used to calculate the rate of return:

Step 2

(i)

The rate of return is calculated below:

(ii)

(iii)

Step 3

b.

The below expression can be used to calculate the real rate of return:

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