Question

A stock that sold for $22 at the beginning of the year was sell- ing for $24 at the end of the year. If the stock paid a dividend of $.50 per share, what is the simple interest rate on an investment in this stock?

Answer 1

Answer:

11.36%

Explanation:

Given:

Selling cost of the stock at the beginning of the year = $22

Selling cost of the stock at the End of the year = $24

Dividends received = $0.50 per share

Thus,

The actual amount received at the end of the year

= Selling cost of the stock at the End of the year + Dividends received

= $24 + $0.50

= $24.50

thus,

the interest received = $24.50 - $22 = $2.50

therefore, the rate of interest = $\frac{\textup{Interest}}{\textup{Initial amount}}\times100$

or

the rate of interest = $\frac{2.50}{22}\times100$

or

the rate of interest = 11.36%