The level of the Syldavia market index is 21,000 at the start of the year and 25,500

Question:

The level of the Syldavia market index is 21,000 at the start of the year and 25,500 at the end. The dividend yield on the index is 4.2%.

a. What is the return on the index over the year?

b. If the interest rate is 6%, what is the risk premium over the year?

c. If the inflation rate is 8%, what is the real return on the index over the year?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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