Question

Last year Mike bought 100 shares of Dallas Corporation common stock for $35 per share. During the year he received dividends of $1.87 per share. The stock is currently selling for $37.75 per share. What rate of return did Mike earn over the year

Answer 1

Answer:

Rate of return is 13.2%

Explanation:

Rate of Return is the actual return that an investor receives from an investment in asset during a specific period of time. If the investment is made in the stocks, It includes the dividend received and the price change of the stock.

Total return Received = Dividend + Price change = $1.87 + ($37.75 - 35 ) = $4.62

Rate of Return = Total return During the period / Initial Price of the stock

Rate of Return = $4.62 / $35 = 0.132 = 13.2%