Question

You purchased 250 shares of common stock for $37 per share. After 30 days, the stock paid a dividend of $8 per share and you decided to sell all of the stock for $30 per share. What was your return on this investment?

Answer 1

Answer:

2.7%

Explanation:

Given that

Number of shares purchased = 250

Purchase price = $37 per share

Dividend paid = $8 per share

Selling price = $30 per share

Return on investment = Capital return + dividend return

where,

Capital return is

= ($30 - $37) ÷ ($37)

= -0.189%

And, the dividend return is

= ($8) ÷ ($37)

= 0.216%

So, the return on this investment is

= 2.7%