An investment has a current price of $75 and has paid a $10 dividend over the ho

Question

An investment has a current price of $75 and has paid a $10 dividend over the holding period. if the investment was purchased for $80 and inflation has been 2%, what is the nominal return for the investment? A. 4.6% B. 4.17% C. 6.25% D. 6.67% E. 5% An investment has a current price of $75 and has paid a $10 dividend over the holding period. if the investment was purchased for $80 and inflation has been 2%, what is the nominal return for the investment? A. 4.6% B. 4.17% C. 6.25% D. 6.67% E. 5% An investment has a current price of $75 and has paid a $10 dividend over the holding period. if the investment was purchased for $80 and inflation has been 2%, what is the nominal return for the investment? A. 4.6% B. 4.17% C. 6.25% D. 6.67% E. 5%

Explanation / Answer

As the pricce is nominal, so we need not adjust for inflation

hence,

Return=(75+10-80)/80=6.25%

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