Assuming a $1,000 face value, what was your total dollar return on this investme

Question

Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?

What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

If the inflation rate last year was 4.4 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

a)

Total dollar return:

= $926+$74-$897

= $103

b)

Nominal rate of return;

= ($926+$74-$897)÷$897

= 11.48%

c)

(1+Nominal rate) = (1+Real rate)×(1+Inflation rate)

(1+11.48%) = (1+Real rate)×(1+4.4%)

Real rate of return = 6.78%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.