An investor bought a stock for $18 (at t=0) and one year later it paid a $0 dividend (at t=1). Just after the dividend was paid, the stock price was $15 (at t=1). Inflation over the past year (from t=0 to t=1) was 6% pa, given as an effective annual rate. Which of the following statements is NOT correct? The stock investment produced a: Select one: a.Nominal capital return of -16.666667% pa. b.Nominal income return of -16.666667% pa. c.Real capital return of -21.383648% pa. d.Real income return of 0% pa. e.Real total return of -21.383648% pa.
An investor bought a stock for $18 (at t=0) and one year later it paid a $0 dividend (at t=1). Just after the dividend was paid, the stock price was $15 (at t=1). Inflation over the past year (from t=0 to t=1) was 6% pa, given as an effective annual rate. Which of the following statements is NOT correct? The stock investment produced a: Select one: a.Nominal capital return of -16.666667% pa. b.Nominal income return of -16.666667% pa. c.Real capital return of -21.383648% pa. d.Real income return of 0% pa. e.Real total return of -21.383648% pa.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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An investor bought a stock for $18 (at t=0) and one year later it paid a $0 dividend (at t=1). Just after the dividend was paid, the stock price was $15 (at t=1). Inflation over the past year (from t=0 to t=1) was 6% pa, given as an effective annual rate. Which of the following statements is NOT correct? The stock investment produced a:
Select one:
a.Nominal capital return of -16.666667% pa.
b.Nominal income return of -16.666667% pa.
c.Real capital return of -21.383648% pa.
d.Real income return of 0% pa.
e.Real total return of -21.383648% pa.
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