Question

ABC Corp stock ended the previous year at $23.36 per share. It paid a $2.37 per share dividend last year. It ended last year at $18.89. If you owned 500 shares of ABC, your dollar return was $________(whole number) and your percent return was _____% (2 decimal places, do not round up).

Answer 1

The dollar return for owning 500 shares of ABC Corp stock, given the decrease in stock price and the dividend received, is a loss of $1,050. The percent return on investment is -8.98%.

Step-by-step explanation:

To calculate the dollar return and percent return on ABC Corp stock, you must consider the change in stock price and the dividends received. Owning 500 shares, the total dividend income would be 500 shares multiplied by the $2.37 dividend, which equals $1,185.

The decrease in stock price represents a loss, calculated by the difference between the end and start prices ($23.36 - $18.89) which is $4.47 per share. Multiplying this by the 500 shares results in a capital loss of $2,235. The net dollar return is the sum of the dividend income and the capital loss: $1,185 - $2,235 equals a net loss of $1,050.

The percent return on investment (ROI) is calculated by dividing the net dollar return by the initial investment cost and then multiplying by 100. The initial investment cost is the beginning stock price multiplied by the number of shares, which is $23.36 multiplied by 500 shares equaling $11,680. Therefore, the percent return is ($1,050 / $11,680) * 100% which equals -8.98%.