Answer:
The total return on investment for the holding period is 10.5%.
Explanation:
If the consumer bought 100 shares for a value of $ 150, obtaining after a year $ 450 total for dividends and seeing his shares go to a value of $ 161.25, to obtain the total return on investment we must perform the following calculations:
On the one hand, we have a return of $ 450 in dividends, which were paid by the total set of 100 shares, with which each share paid $ 4.50 in that concept.
In addition, we have the increase in the value of the shares, which went from $ 150 to $ 161.25, that is, an increase of $ 11.25 per share, which multiplied by the total of 100 shares gives a total sum of $ 1,125.
Thus, adding the dividends to the improvement in the value of the shares, we have a total profit of $ 1,575. Now, to determine the percentage of return that said sum represents, we must perform a cross multiplication:
15,000 = 100
1,575 = X
(1,575 x 100) / 15,000 = X
10.5 = X
So, the rate of return on this investment is 10.5% of the starting value.
