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
Asked Feb 11, 2020
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

Expert Answer

star
star
star
star
star
1 Rating
Step 1

a.

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

Finance homework question answer, step 1, image 1

Step 2

(i)

The rate of return is calculated below:

Finance homework question answer, step 2, image 1

(ii)

Finance homework question answer, step 2, image 2

(iii)

Finance homework question answer, step 2, image 3

Step 3

b.

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

Finance homework question answer, step 3, image 1

...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

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

Business

Finance

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Balance SheetAssets LiabilitiesCurrent Assets Current LiabilitiesCash 46 Accounts payable 39Accounts...

A: Working capital:Working capital, also called net working capital (NWC), is the difference between th...

question_answer

Q: Is it neccessary  for a business to use the same method of computing depriciation  for all classes o...

A: Meaning of depreciation:Depreciation is nothing but a decrease in the asset value due to wear and te...

question_answer

Q: Calculate Gillian Pool and Spa Supplies’ average annual compound growth rate of sales, and analyze i...

A: Compound annual growth rate on sales measure the growth rate on sales over the specific time period....

question_answer

Q: 1. You are considering expanding your product line, which currently consists of Lee’s Press-on Nails...

A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you. ...

question_answer

Q: Suppose that a bond has an 8% coupon, a 6% YTM, and a 4% YTC and is callable in 3 years. For this bo...

A: Click to see the answer

question_answer

Q: managers in an... | bartleby CENGAGE M bartleby.com Assignment 03 - Financial Statements, Cash Flow,...

A: Calculate the free cash flows as follows:

question_answer

Q: No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share di...

A: Click to see the answer

question_answer

Q: In a slow year, Deutsche Burgers will produce 3.5 million hamburgers at a total cost of $5.3 million...

A: b) The computation of variable cost per unit is as follows: Therefore, the variable cost per unit i...

question_answer

Q: What are the steps and explanation for determining the current value of BondB that matures in 2 year...

A: Considering Bond A is a zero coupon bond, yield can be calculated as the present value of the FV of ...