Question

Last year, you purchased a stock at a price of $52.00 a share. Over the course of the year, you received $1.70 per share in dividends and inflation averaged 2.2 percent. Today, you sold your shares for $56.60 a share. What is your approximate real rate of return on this investment?

Answer 1

Answer:

9.915 %

Explanation:

Rate of return = ($56.6 - $52 + $1.70)/ $52 * 100

Rate of return = 0.121154 * 100

Rate of return = 12.115%

Inflation = 2.2 %

Real rate of return = 12.115% - 2.2%

Real rate of return = 9.915 %