Question

Nathan buys several shares of ABC Corp. stock for $60 each. At the end of one year, the stock price has risen to $66. Plus he was paid a dividend of $1.50 per share. What is the approximate rate of return (or yield) on this investment for the year. (You can ignore any commissions or taxes.) Remember: the rate of return is the total return as a percentage of your initial investment.

Answer 1

rate of return = 12.50%

Step-by-step explanation:

given data

stock = $60 each

stock price = $66

paid dividend = $1.50 per share

to find out

rate of return

solution

first we get here total return that is express as

total return = stock price - stock + paid dividend .................1

total return = $66 - $60 + $1.5

total return = $7.5

so now rate of return will be here as

rate of return =
`(total\ return)/(stock)`

rate of return =
`(7.5)/(60)` × 100

rate of return = 12.50%