Question

Eight months ago, you purchased 400 shares of Winston, Inc. stock at a price of $54.90 a share. The company pays quarterly dividends of $.50 a share. You have received dividends twice. Today, you sold all of your shares for $49.30 a share. What is your total percentage return on this investment? a. -10.2 percent b. -9.3 percent c. -8.4 percent d. 12.0 percent e. 13.4 percent

Answer 1

Answer:

c)    - 8.4%

Explanation:

The return on a stock is the sum of the capital gains(loss) plus the dividends earned.

Capital gain is the difference between he value of the stocks when sold and the cost of the shares when purchased.

Total shareholders Return =

(Capital gain/ loss + dividend )/purchase price  ×  100

So we can apply this to the formula:

Dividend = $0.5 × 2 = $1

Capital loss = $49.30 - 54.90

% return =( $1 + ($49.30 - 54.90))/54.90

=-8.4%

Total percentage return on this investment = -8.4%