Question

Compute the real rates of return for the following situations assuming that the inflation rate is 2 percent. Compute the real rates of return if the rate of inflation was 6 percent. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to one decimal places. On February 1, you bought 120 shares of stock in the Francesca Corporation for $41 a share and a year later you sold it for $46 a share. During the year, you received a cash dividend of $1.60 a share. Real rate of return at 2%:   % Real rate of return at 6%:   % On August 15, you purchased 100 shares of stock in the Cara Cotton Company at $39 a share and a year later you sold it for $34 a share. During the year, you received dividends of $3.30 a share. Real rate of return at 2%:   % Real rate of return at 6%:   % At the beginning of last year, you invested $4,050 in 90 shares of the Chang Corporation. During the year, Chang paid dividends of $5.00 per share. At the end of the year, you sold the 90 shares for $56 a share. Real rate of return at 2%:   % Real rate of return at 6%:   %

Answer 1