Question
An investor bought a stock for $ 14 (at t=0) and one year later it paid a $ 2 dividend (at t=1). Just after the
An investor bought a stock for $14 (at t=0) and one year later it paid a $2 dividend (at t=1). Just after the dividend was paid, the stock price was $17 (at t=1). Inflation over the past year (from t=0 to t=1) was 0% pa, given as an effective annual rate. Which of the following statements is NOT correct? The stock investment produced a:
Select one:
a. Nominal capital return of 21.428571% pa.
b. Nominal total return of 35.714286% pa.
c. Real capital return of 21.428571% pa.
d. Real income return of 17.346939% pa.
e. Real total return of 35.714286% pa.
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A stock is expected to pay its first $36 dividen
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