Question

A couple bought some stock for $30 per share that pays an annual dividend of $0.90 per share. After 1 year the price of the stock was $33. Find the simple interest rate on the growth of their investment.

Answer 1

The simple interest rate on the growth of their investment is 10%.

Step-by-step explanation:

To find the simple interest rate on the growth of the investment, we need to calculate the difference between the final price of the stock and the initial price of the stock. The difference is $33 - $30 = $3.

Since the annual dividend is $0.90 per share, after 1 year, the couple will receive a dividend equal to $0.90 per share, which is equivalent to $0.90.

The simple interest rate can be calculated as the ratio of the difference in price and the initial price of the stock, multiplied by 100%. In this case, the simple interest rate is ($3 / $30) * 100% = 10%.