Question

If you purchase 100 shares of XYZ Corporation for $50 per share, receive a dividend check for $200, and then sell the stock for $62 per share, what will your return on the stock be

Answer 1

Your return on the stock will be 28%.

Step-by-step explanation:

Po = Initial price per share = $50

P1 = New price per share = $62

S = Number shares purchased = 100

D = Dividend per share = Dividend received / Number shares purchased = $200 / 100 = $2

Therefore, we have:

Stock return = ((P1 - Po) + D) / Po = (($62 - $50) + $2) / $50 = ($12 + $2) / $50 = $14 / $50 = 0.28, or 28%

Therefore, your return on the stock will be 28%.