Compute the real rates of return for the following situations assuming that the inflation rate is 2
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Question:
Compute the real rates of return for the following situations assuming that the inflation rate is 2 percent. Compute the real rates of return if the rate of inflation was 6 percent. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to one decimal places.
- On February 1, you bought 140 shares of stock in the Francesca Corporation for $44 a share and a year later you sold it for $48 a share. During the year, you received a cash dividend of $1.60 a share.
Real rate of return at 1.10%:
Real rate of return at 2%: %
- On August 15, you purchased 90 shares of stock in the Cara Cotton Company at $32 a share and a year later you sold it for $26 a share. During the year, you received dividends of $3.50 a share.
Real rate of return at 2%: %
Real rate of return at 6%: %
- At the beginning of last year, you invested $4,000 in 100 shares of the Chang Corporation. During the year, Chang paid dividends of $4.00 per share. At the end of the year, you sold the 100 shares for $46 a share.
Real rate of return at 2%: %
Real rate of return at 6%: %
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