Respuesta :
The nominal rate of return of Avondale Aeronautics is 10%
Describe the nominal rate of return.
Before deducting costs like taxes, investment fees, and inflation, an investment's nominal rate of return is the amount of money it makes. The nominal rate would be 10% if an investment yielded a 10% return.
The nominal rate of return is the overall rate of return on an investment before taking into account any premiums or deductions, such as investment fees, trading charges, tax expenses, and inflation. It could be thought of as the return's "face" amount.
a. Nominal annual rate of return = Annual dividend/× Current Price
= $2× 4 / $80 = 10%
b. Effective annual rate of return = ( 1+[tex]r_{NOM}[/tex] / 4)⁴ - 1
= (1 + 0.10 / 4)^4 - 1 = 10.38%
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