shares
Question
You purchase 100 shares of stock for $50 a share. The stock pays a $3 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) $47; (ii) $50; (iii) $53? (Leave no cells blank – be certain to enter “0” wherever required. Enter your answers as a whole percent.) |
| Stock price | Rate of return |
| $47 | % |
| $50 | % |
| $53 | % |
| b. | What is your real (inflation-adjusted) rate of return if the inflation rate is 5%? (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.) |
| Stock price | Real rate of return |
| $47 | % |
| $50 | % |
| $53 |
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