Problem:
You purchased 200 shares of stock for $23 per share exactly one year ago. During the year, the stock paid a $1.10 dividend per share and the current stock price is $18 per share. The inflation rate the last year was 2%. Answer the following (showing all work):
Required:
Question 1: Calculate the actual return (also called percentage return) on your investment over the last year.
Question 2: Calculate (i) the dividend yield and (ii) the percentage capital gain.
Question 3: Calculate the real rate of return on the stock.
Note: Show supporting computations in good form.