Real v e r sus Nominal Retu r ns. You purchase 100 shares of stock for $40 a share. The stock pays a

Real v e r sus Nominal Retu r ns. You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment for these end-of-year stock prices? What is your real (inflation-adjusted) rate of return? Assume an inflation rate of 5 percent.

a. $38 b. $40 c. $42