Question

Assume that universal plana stock is selling for 130 at the beginning of the year. During the year, 2.60 in dividends were paid. The stock was selling for 128.7. What was the annual return?

Answer 1

The student's question on the annual return of a stock is a mathematics question. The total annual return on the stock is $1.30, which is translating into a 1% return on the initial investment.

Step-by-step explanation:

The student asked about calculating the annual return on a stock that was purchased at the beginning of the year for $130 and sold at the end of the year for $128.70, with $2.60 in dividends received during the year. To find the annual return, we look at both the capital loss (since the stock sold for less than the purchase price) and the dividends received.

The capital loss was $130 - $128.70 = $1.30. However, we still received a dividend of $2.60 during the year. Therefore, the total annual return is the sum of the capital loss (although in this case it's negative, so we subtract it) and the dividends: $2.60 - $1.30 = $1.30.

To find the percentage return, divide the total return by the initial investment and multiply by 100. So the percentage return is ($1.30 / $130) × 100 = 1%.