Question

One year ago, you purchased 500 shares of stock for $22 a share. The stock pays $0.32 a share in dividends each year. Today, you sold your shares for $24.50 a share. What is your total dollar return on this investment?a. $1,250 b. $1,090 c. $1,199 d. $1,164

Answer 1

Answer:

no option is correct

long term capital gains = ($24.50 - $22) x 500 = $1,250

dividend income = $0.32 x 500 = $160

total return = $1,410

Maybe your teacher is asking about long term capital gains only. If that is the case, then option A. $1,250 is correct

Explanation:

total return = ending value - initial value + dividends received = (500 x $24.50) - (500 x $22) + (500 x $0.32) = $12,250 - $11,000 + $160 = $1,410

holding period return = (ending value - initial value + dividends received) / initial value = $1,410 / $11,000 = 0.1282 = 12.82%