Question

You purchased a stock one year ago for $91.20. Today you sold the stock and realized a total return of -63.7% on your investment. During the year you received a total of $2.28 in dividends. At what price did you sell the stock?

Answer 1

To find the selling price of the stock, subtract the total return from the net cost.

Step-by-step explanation:

To find the price at which you sold the stock, we need to calculate the original purchase price. Since you received $2.28 in dividends during the year, we subtract this amount from the original purchase price to get the net cost of the stock: $91.20 - $2.28 = $88.94.

Next, we need to calculate the total return on the investment, which is given as -63.7%. We can use this information to find the selling price of the stock:

Let the selling price be x. We have:

$88.94 + $2.28 = $11.80 (dividends) and $11.8 * -0.637 = $$7.51$ (capital loss)

The total return on investment is $$7.51 and is given by:

$11.8 - $7.51 = $4.29 (rounded to two decimal places)

To find the selling price of the stock, we subtract the total return from the net cost:

$88.94 - $4.29 = $$92.25$

Therefore, you sold the stock for $$92.25$.