Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help with this question. Thank you An investor bought a stock for $16 (at t=0 ) and one year later it paid a $1

Need help with this question. Thank you
image text in transcribed
An investor bought a stock for $16 (at t=0 ) and one year later it paid a $1 dividend (at t=1 ). Just after the dividend was paid, the stock price was $21 (at t=1 ). Inflation over the past year (from t=0 to t=1 ) was 4% pa (note the negative sign), given as an effective annual rate. Which of the following statements is Nor correct? All answer options are rounded to 6 decimal places. The stock investment produced a Select one a. Nominal capital return of 37.5% pa. b. Nominal total return of 37.5% pa c. Real capital return of 3671875% pa X d. Real income return of 6.510417% pa e. Real total tetum of 43229167%pa

Step by Step Solution

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

Step: 3

blur-text-image

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

Multinational Business Finance

Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

6th Edition

0201538997, 978-0201538991

More Books

Students also viewed these Finance questions