Question

monique bought 300 shares of stock for $31.25 per share. The corporation paid $0.50 per share dividend last year. After one year, she sold the stock for $33.75 per share. What was the total amount of her return on this investment assuming she paid no fees? What was her rate of return?

Answer 1

Answer:

9.6%

Explanation:

To find her rate of return we have to first determine the total gains on her investment, from which the total cost will be subtracted and then the rate of return can be calculated.

Inflows

Dividend = $0.5*300 shares = $150

Sales........=$33.75*300 shares = $10,125

Total inflow...................................= $10,275

Outflow

Purchase of shares = $31.25*300 shares = $9,375

Returns = Inflow - Outflow = $10,275 - $9,375 = $900

Rate of returns = 900/9,375 = 0.096 or 9.6%