1. A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $2 per share and sells for $57. Required:

a. What is the total rate of return on the stock?

b. What are the dividend yield and percentage capital gain?

c. Now suppose the year-end stock price after the dividend is paid is $43. What are the dividend yield and percentage capital gain in this case?

2. The Costaguanan stock market provided a rate of return of 96%. The inflation rate in Costaguana during the year was 84%. In Ruritania, in contrast, the stock market return was only 16%, but the inflation rate was only 3%.

a. Calculate the real rate of return for both the Costaguana and the Ruritania stock markets. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

b. Which countrys stock market provided the higher real rate of return?