# 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 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  Return485054

Question
2 views

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

check_circle

star
star
star
star
star
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:

...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in