At the beginning of the year, you bought 100 shares of Google common stock for $95 , and over the course of the year, the company paid a dividend of $4 per share. At the end of the year, you sell your 100 shares for $110. The inflation rate for the year was 3 percent. The nominal return on your investment was _ %. The real return on your investment was _%.

Question

Business

Lawrence Hood

17 April, 13:29

At the beginning of the year, you bought 100 shares of Google common stock for $95 , and over the course of the year, the company paid a dividend of $4 per share. At the end of the year, you sell your 100 shares for $110. The inflation rate for the year was 3 percent. The nominal return on your investment was _ %. The real return on your investment was _%.

+3

Answers (1)

Know the Answer?

Nicolas · Answer 1

The nominal return on your investment was 11.58%. The real return on your investment was 14.58%.

Explanation:

real return = [[110 - (95 + 4) ]/95]*100

= 11.58%

nominal return = real return + inflation

= 11.58% + 3%

= 14.58%

Therefore, The nominal return on your investment was 11.58%. The real return on your investment was 14.58%.