Question

1.you bought a stock one year ago for $50 per share and sold it today for $55 per share. it paid a $1 per share dividend today. what was your realized return?

Answer 1

To calculate the realized return, we need to consider both the capital gain and the dividends received.

Capital gain = Sale price - Purchase price = $55 - $50 = $5 per share

Dividends = $1 per share

Total gain = Capital gain + Dividends = $5 + $1 = $6 per share

Realized return = Total gain / Purchase price = $6 / $50 = 0.12 or 12%

Therefore, the realized return on the investment was 12%.