Real Reverse Nominal Returns

You purchase 100 shares of stock for
$40 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment for these end-of-year stock prices? What is your real (inflation-adjusted) rated of return? Assume an inflation rate of 4 percent.
a. $38
b. $40
c. $42

2 for each 40 is five percent. If inflation is 4 percent, then one percent is the real return. So 40 cents a share is the real return

I agree with BobP. Are you sure the multiple choices are in dollars and not cents? Could be a misprint.

  1. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. I need HELP bad! Macroeconomics!

    1). Kelly purchased ten shares of Gentech stock for $200 in year 1 and sold all the shares in year 2 for $220 a share. Between year 1 and year 2, the price level increased by 5%. The tax on capital gains is 50%. If the capital

  2. Math

    A company experiences a stock split due to poor performance. Ariana's initial investment was a purchase of 50 stocks at $12.99 per share. The reverse split is 1:2. How many stocks does Ariana own after the stock split? 6.5 150 25

  3. math

    Sally owns 145 shares of stock in a property management company. The current price of the stock is $42.17 per share. If the price of the stock decreases to $35.94 in the next month, how much did the value of Sally's shares

  4. Accounting

    Gorton Corporation has 30,000 shares of $10 par value common stock outstanding when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share. After the split, how many shares of stock

  1. Math

    Ramek sold 100 shares of stock for $58 a share. He paid $49 a share for the stock three years ago. How much was his capital gain?

  2. financial accounting

    (5) Chapter 13 Problem The Torre Company has the following balances in stockholders equity on December 31st. Common Stock - $5.00 par, 60,000 issued $300,000 Additional paid in capital - common 600,000 Preferred stock - $100 par,

  3. accounting

    Jones Company is authorized to issue 20,000 shares of no-par, $5 stated-value common stock and 5,000 shares of 9%, 100 par preferred stock. It enters into the following transaction: 1. Accepts a subscription contract to 7,000

  4. Accounting

    Effect of Stock Split Gino's Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino's Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1 stock

  1. Algebra

    Norman and Suzanne own 42 shares of a fast food restaurant stock and 66 shares of a toy company stock. At the close of the markets on a particular day in​ 2004, their stock portfolio consisting of these two stocks was worth

  2. accounting

    Finishing Touches has two classes of stock authorized: 8%, $10 par preferred and $1 par value common. The following transactions affect stockholders' equity during 2010, its first year of operations: January 2 Issue 100,000 shares

  3. Consumer Math- HELP

    1. Fred salmon purchased six 1,000 bonds at 92. The bonds pay 6.5% What was the cost of the bonds? What was the total annual interest? What is the yield (to the nearest percent)? 2. John Tucker is interested in purchasing stock.

  4. Personal Finance

    Jo Bower owns 150 shares of Data General stock. She purchased the stock for $24 a share. She sold her stock for $30 a share. The commissions required to buy and sell her stock totaled $120. Assuming that she received no dividends

You can view more similar questions or ask a new question.