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frutty [35]
3 years ago
12

If a stock is purchased for $100 per share and held one year, during which time a quarterly dividend of $1.5 is paid, each quart

er, and the price climbs to $130 per share. What is the rate of return
Business
1 answer:
xenn [34]3 years ago
7 0

Answer:

Total yield or rate of return is 0.36 or 36%

Explanation:

To calculate rate of return which is also the total yield on the stock, we will use the following formula,

Total Yield = (D + C) / P0

Where,

  • D represents dividends paid by the stock during the year
  • C is the capital appreciation(pr depreciation) or rise(or fall) in the price of the stock as compared to the purchase price
  • P0 is the purchase price or price in Year 0

Total dividends for the year = 1.5 * 4 = $6

C = 130 - 100 = $30

Total Yield = (6 + 30) / 100

Total yield = 0.36 or 36%

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