Homework Answers
a. Return = (26,600 - 22,100)/22,100 + Dividend yield
Return = 0.2606635071 + 0.046
Return = 0.3066635071
Return = 30.67%
b. Risk premium = Return - interest rate
Risk premium = 0.3066635071 - 0.08
Risk premium = 0.2266635071
Risk premium = 22.67%
c. Real return = (1 + 0.3066635071)/(1 + inflation) - 1
Real return = (1 + 0.3066635071)/(1 + 0.09) - 1
Real return = 0.1987738597
Real return = 19.88%
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