Calculate the Nominal Return, Real Return, and Risk Premium for the Following

question 83

Essay

Calculate the nominal return, real return, and risk premium for the following common stock investment:
$$\begin{array} { | c | c | } \hline \text { Purchase price } & \$ 60.00 \text { per share } \\\hline \text { Dividend } & \$ 3.50 \text { per year } \\\hline \text { Sales price } & \$ 73.00 \text { per share } \\\hline \text { Treasury bill yield } & 8.5 \% \\\hline \text { Inflation rate } & 7.5 \% \\\hline\end{array}$$

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Definitions:

Product X

A placeholder name commonly used to denote a specific product, goods, or service in economic models and discussions that is not further specified.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply between two points by averaging the two end points' prices and quantities.

Cable Subscribers

Customers who pay for cable television services, often provided through a fixed infrastructure of underground or overhead cables.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.