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Question

You purchase a share of stock for $30. One year later you receive $1.00 as dividend and sold the share for $39.

What was your holding period return? Suppose the rate of inflation over the year was 10%. What was the exact rate of growth of purchasing power? Suppose the tax rate on dividends is 40% and the tax rate on capital gain is 33%. What is the after-tax real rate of return on your investment?

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