Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

An investor bought a stock for $15 (at t=0) and one year later it paid a $0 dividend (at t=1). Just after the dividend was

An investor bought a stock for $15 (at t=0) and one year later it paid a $0 dividend (at t=1). Just after the dividend was paid, the stock price was $19 (at t=1). Inflation over the past year (from t=0 to t=1) was 10% 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 26.666667% pa. 


b. Nominal total return of 26.666667% pa. 


c. Real capital return of 39.333334% pa. 


d. Real income return of 0% pa. 


e. Real total return of 15.151515% pa.

Step by Step Solution

3.48 Rating (158 Votes )

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments An Introduction

Authors: Herbert B Mayo

9th Edition

324561385, 978-0324561388

More Books

Students explore these related Medical Sciences questions