Question

Ahmet purchased a stock for $45 one year ago. The stock is now worth $65. During the year, the stock paid a dividend of $2.50. What is Ahmet’s total return?

Answer 1

Answer:

Net return = 50%

Explanation:

Total return on share = Dividend + price appreciation

Here, Dividend = $2.50

Price Appreciation = $65 - $45 = $20

Net return = $20 + $2.50 = $22.50

Net return as percentage = $22.5/$45 = 50%

Sometimes appreciation is not considered, the increase in price is only considered at time of sale.

In that case only dividend will be considered, but generally above stated manner is correct.

Therefore, net return = 50%