Problem 11-8 Real versus Nominal Returns (LO2)

You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end.

What is your real (inflation-adjusted) rate of return if the inflation rate is 3%?Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.

\begin{tabular}{|c|c|c|} \hline Stock Price & Real Rate of Return \\ \hline 38 & & % \\ \hline 40 & & % \\ \hline 46 & & % \\ \hline \end{tabular}