Question

A couple bought some stock for $20 per share that pays an annual dividend of $0.60 per share. After 2 years the price of the stock was $22.

(a) What is the return on investment?


(b) Find the simple interest rate on the growth of their investment

Answer 1

a) $2 + 2 x 0.6 = $3.20. roi = 3.2/20 = 16%

b) reinvestment is not a condition so growth only includes the stock price change

$2/$20 = 10% per two years. no value given for a single year, so the 10% is a two-year growth value.