Suppose That You Bought a Stock for $40,received a Dividend

question 8

Multiple Choice

Suppose that you bought a stock for $40,received a dividend of $0.50,and sold it for $41 after 91 days.Your annualized arithmetic rate of return equals:

• A) 5.01 percent
• B) 10.03 percent
• C) 15.04 percent
• D) 16.07 percent
• E) None of these answers are correct.

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Definitions:

Nominal-Wage Rigidity

The situation where nominal wages are slow to adjust to changing economic conditions, affecting employment and economic dynamics.

Classical Self-Correction Mechanism

A theory suggesting that free markets are capable of automatically adjusting to and correcting economic imbalances.

Recessions

A temporary downturn in the economy marked by decreased trade and industrial activities, typically recognized by a decline in Gross Domestic Product (GDP) for two consecutive quarters.

Keynesian Analysis

An economic approach that emphasizes the role government can play in smoothing out the fluctuations in the economy through fiscal and monetary policy.