Question

Calculate the stock return from the following information:

Beginning Price: $42.00 Price 1 Year Later: $47.50 Annual dividend:
$5.00

Answer 1

To calculate the stock return, we can use the formula:

Stock Return = (Ending Price - Beginning Price + Dividends) / Beginning Price

Given:

Beginning Price = $42.00

Ending Price = $47.50

Annual Dividend = $5.00

Stock Return = ($47.50 - $42.00 + $5.00) / $42.00

Stock Return = $10.50 / $42.00

Stock Return ≈ 0.25 or 25%

Therefore, the stock return from the given information is approximately 25%.