You purchase 115 shares of stock for $53 a share. The stock pays a $7 per share dividend at year-end. What is the rate of return on your investment for these end-of-year stock prices? What is yourreal (inflation-adjusted) rate of return? Assume an inflation rate of 5%. (Round your answers to 2decimal places. Use the minus sign for negative numbers If it is necessary.)a. End-of-year stock price = $48Rate of returnReal rateb. End-of-year stock price = $53Rate of returnReal ratec. End-of-year stock price = $60Rate of returnReal rate

Rate of return on stocks = (End of year stock price - purchase price + Stock dividend)/purchase…

Answered: You purchase 115 shares of stock for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

You purchase 100 shares of stock for $47 a share. The stock pays a $3 per share dividend at year - end. What is the rate of return on your investment for these end-of-year stock prices? What is your real (inflation - adjusted) rate of return? Assume an inflation rate of 4%. (Round your answers to 2 decimal places. Use the minus sign for negative numbers if it is necessary.) a) End of year stock price = $43 Real rate of return = ? Real rate= ? b) End of year stock price = $47 Real rate of return= ? Real rate= ? c) End of year stock price = $50 Real rate of return= ? Real rate = ?
2. Answer both questions: a. You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment if the year-end stock prices turn out to be $38, $40, and $42? What is your real (inflation-adjusted) rate of return in each case, assuming an inflation rate of 3%? b. Consider the following information on the returns on stock and bond investment. Scenario Profitability Stocks Bonds Recession .2 -5% +14% Normal Economy .6 +15% +8% Boom .2 +25% +4% i) Calculate the expected rate of return and standard deviation in each investment. ii) Do your results support or contradict the historical record on the relationship between risk and return in the financial market in both Canada and the United States? iii) Which investment would you prefer? Explain your answer.
You purchase 100 shares of stock for $25 a share. The stock pays a $3 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $22; (ii) $25; (iii) $26? b. What is your real (inflation-adjusted) rate of return if the inflation rate is 2%?
You purchase 100 shares of stock for $42 a share. The stock pays a $2.5 per share dividend at year-end. What is the rate of return on your investment if the end-of-year stock price is $45? What is your real rate of return? Assume an inflation rate of 4 percent.
What is the holding period return per year for a stock that you bought for $70 pays you a $6 dividend midyear each year for two years and you sell for $78? Hint: if you use TVM your payment is $6
Consider an example. Assume a share of preferred stock with the following characteristics: Par value $100 Dividend rate 3.0% per year Payment schedule semiannual Maturity date You are analyzing this preferred stock for possible purchase. Your required rate of return on this stock is 5% per year, compounded semiannually. Draw a time line showing the expected dividends for this preferred stock. Calculate the value of this preferred stock based on the required rate of return. Assume that the current market price for this preferred stock is $75 per share. Calculate the expected return based on the market price. Should you invest in the stock? Why or why not? Be sure to use your results from BOTH parts B and C above. You are analyzing a share of XYZ…
You plan to buy a stock at a price of $190.8 today. The stock does not yet pay a dividend and you expect it to sell for $237.9 in one year. What is the expected holding period return. Convert to a percent then round to 2 decimal places. Answer:
What is the rate of return if you purchase a stock today for $35 and sell it in five years for $43? Assume the stock pays an annual dividend of $2.8. Answer choices: 10.43% 12.01% 11.62% 9.79%
(16) You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. a. What is the rate of return on your investment if the end-of year stock price is $42? b. What is your real (inflation-adjusted) rate of return if the inflation rate is 4%?
Consider a stock that wil have price of $31 54 one year from now and pay a dividend of $3.28 in one year. The expected rate of returm is 3.5%. What is the current price of the stock? Enter your response below rounded to 2 DECIMAL PLACES. Number
You expect a share of stock to pay dividends of $1.60, $2.25, and $2.50 in each of the next 3 years. You believe the stock will sell for $25.00 at the end of the third year. a. What is the stock price if the discount rate for the stock is 10%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the dividend yield for year 1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What will be the dividend yield at the start of year 2? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment if the year-end stock prices turn out to be $38, $40, and $42? What is your real (inflation-adjusted) rate of return in each case, assuming an inflation rate of 3%? Show all of your working. Do no use Excel.

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