Rate of return. The level of the Syldavia market index is 21,000 at the start of the year and 22,000 at the end. The dividend yield on the index is 2%. If the inflation rate is 3%, what is the real return on the index over the year?

Rate of return. The level of the Syldavia market index is 21,000 at the start of the year and 22,000 at the end. The dividend yield on the index is 2%. If the inflation rate is 3%, what is the real return on the index over the year?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section7.6: Valuing Nonconstant Growth Stocks

Problem 3ST

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Rate of return. The level of the Syldavia market index is 21,000 at the start of the year and 22,000 at the
end. The dividend yield on the index is 2%.
If the inflation rate is 3%, what is the real return on the index over the year?

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