1. You purchased 1,000 shares of stock for $43 per share exactly one year ago. D

Question

1. You purchased 1,000 shares of stock for $43 per share exactly one year ago. During the year, the stock paid a $.50 dividend per share and the current stock price is $27 per share. The inflation rate the last year was 2%. Answer the following (showing all work):

   (a) Calculate the actual return (also called percentage return) on your investment    over the last year.

   (b) Calculate (i) the dividend yield and (ii) the percentage capital gain.

   (c) Calculate the real rate of return on the stock.

Explanation / Answer

Hello Pal,

First of all a very nice as well as intersting question from your side.

So now straight to the question, as asked above with all the information available from your side and from mine, the answer is as under:

After calculation of the above given information, we can conclude that the answer will be as under:

a) 37.2%

b) 16000, 14.2%

c) 9.29%

That is all I can say from the above given information by you, hope have solved your problem to some extent.

Regards.

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