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arlik [135]
3 years ago
8

Wanda Sotheby purchased 120 shares of Home Depot stock at $148 a share. One year later, she sold the stock for $140 a share. She

paid her broker a commision of $34 when she purchased the stock and a commision of $39 when she sold it. During the 12 months she owned the stock, she received $427 in dividends. Calculate Wanda’s total return on this investment. (A loss should be indicated with a minus sign.)
Business
1 answer:
Archy [21]3 years ago
5 0

Answer:

Return on investment =  -0.71%

Explanation:

<em>The return on investment is the sum of the dividends earned and capital gains made during the holding period of the investment.  </em>

<em>Dividend is the proportion of the profit made by a company which is paid to shareholders.  </em>

<em>Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal</em>.  

Therefore, we can can compute the return on the investment as follows:  

Total  Return on investment =  

(Capital gain/ loss + dividend )/purchase price × 100  

Capital loss = (184 -140) × 120 = - 480

Dividend = 427

Commission = 34 + 39 =-73

Net loss on investment = - 480 - 73 + 427= -126

Return on investment = -126 /(148× 120) = -0.71%

Return on investment =  -0.71%

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