Solution-Inflation-adjusted rate of return

Inflation-adjusted rate of return

Reference no: EM131030285

You 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.)

Stock price	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.)

Stock price	Real rate of return
$48	%
$50	%
$54	%

Reference no: EM131030285

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Inflation-adjusted rate of return

Reference no: EM131030285

Reference no: EM131030285

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