Question

You invested in 1 share of Apple (AAPL) for $196.94 and sold it a year later for $110.15. The company paid $3.91 each share as dividends during that period. What will be the realized rate of return on this investment? Round your answer to two decimals in percentage. For example, "5.02%" should be entered as "5.02".

Answer 1

The realized rate of return on the investment in Apple stock is -42%.

Step-by-step explanation:

To calculate the realized rate of return on the investment in Apple stock, we need to consider the initial investment, the dividends received, and the final sale price. The formula for calculating the realized rate of return is:

Rate of Return = (Final Sale Price + Dividends - Initial Investment) / Initial Investment

Using the given information:

Initial Investment = $196.94

Final Sale Price = $110.15

Dividends = $3.91

Plugging the values into the formula:

Rate of Return = ($110.15 + $3.91 - $196.94) / $196.94

Rate of Return = -$82.88 / $196.94

Rate of Return = -0.42

To convert this to a percentage, we multiply by 100:

Rate of Return = -0.42 * 100

Rate of Return = -42%

Therefore, the realized rate of return on this investment is -42%.