Question

Six months ago, you purchased 2,200 shares of abc stock for $27.49 a share. you have received dividend payments equal to $.70 a share. today, you sold all of your shares for $29.48 a share. what is your total dollar return on this investment? multiple choice

-$5,918
-$4,378
-$6,254
-$1,540
-$11,836

Answer 1

The correct answer is option 1. The total dollar return on the investment is calculated by adding the capital gain of $4,378 from selling the shares and the dividends earned of $1,540, giving a total return of $5,918.

Step-by-step explanation:

To calculate the total dollar return on an investment in stock, we need to consider both the capital gain (or loss) from selling the stock at a higher (or lower) price than the purchase price and any dividends received during the holding period. The formula to calculate this is as follows:

Capital Gain = (Selling Price per Share - Purchase Price per Share) × Number of Shares

Dividends Earned = Dividend per Share × Number of Shares

Total Dollar Return = Capital Gain + Dividends Earned

Applying this formula to the given scenario:

Capital Gain = ($29.48 - $27.49) × 2,200 shares = $4,378

Dividends Earned = $0.70 × 2,200 shares = $1,540

Total Dollar Return = $4,378 + $1,540 = $5,918

Therefore, the correct answer from the multiple-choice options provided is “$5,918” which represents the total dollar return on the investment.