Question

You purchased a stock at a price of $51.17. The stock paid a dividend of $1.75 per share, and the stock price at the end of the year was $56.79. What was the total return for the year? a. $4.87 b. $6.37 c. $7.87 d. $8.25

Answer 1

The total return for the year was $7.87. Option C is correct.

Step-by-step explanation:

Total return refers to the overall gain or loss on an investment over a particular period, typically expressed as a percentage. It encompasses both capital appreciation (or depreciation) and any income generated from the investment, such as dividends or interest.

Total return includes both the capital gain (change in stock price) and any dividends received.

The capital gain per share = Final stock price - Initial stock price

Capital gain per share = $56.79 - $51.17

Capital gain per share = $5.62

Total return per share = Capital gain per share + Dividends per share

Total return per share = $5.62 + $1.75

Total return per share = $7.37

Therefore, the total return for the year is $7.37 per share, which is closest to option c. $7.87.