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4 May, 04:48

Christina purchased 500 shares of stock at a price of $62.30 a share and sold the shares for $64.25 each. She also received $738 in dividends. If the inflation rate was 3.9 percent, what was her exact real rate of return on this investment? a. 5.50 percent b. 3.95 percent c. 1.60 percent d. 1.54 percent e. 4.20 percent

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  1. 4 May, 06:45
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    1.60 percent

    Explanation:

    exact real rate of return on this investment = interest rate - inflation rate

    total revenue gotten by Christina = (500 * $ 64.25) + $ 738 = $ 32863

    total money invested = 500 * $ 62.30 = $ 31150

    her profit = $ 32863 - $ 31150 = $ 1713

    interest = $ 1713 / $ 31150 = 0.054992 * 100 = 5.4992 %

    exact interest rate = 5.4992 % - 3.9% = 1.5992 approx 1.60 percent
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