Explain nominal rate-real rate and relationship in two rates

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Reference no: EM132018172

1. Assume that you want to buy preferred stock from Apple. If they pay an annual dividend of $5.00 and your required return is 5 percent, what is the most that you should be willing to pay for the stock? Explain your answer.

2. Explain Nominal Rate, Real Rate, and the relationship between these two rates. Please use a real life example to demonstrate when to use a nominal rate, when to use a real rate.

3. You wish to have $2,500,000 in your investment account forty years from now when you retire. You plan to accumulate this sum by making weekly deposits into a mutual fund compounded weekly. If the fund earns a rate of return of 12% annually, how much must you contribute each week?

Reference no: EM132018172

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