Question

Use the following information to calculate a stock’s one-year Return on Investment (calculate to the nearest single decimal point): Selling price: $50/share Dividends received during the year: $1/share Purchase price: $45/share Discount brokerage fee: $25 Number of shares owned: 200

Answer 1

10.8%

Step-by-step explanation:

The return received on the asset in the period in which it is held is called holding period return. It included the interest / dividend received and change in the Purchase price and Selling price.

According to given data

Dividend received = $1 x 200 = $200

Purchase Value = 200 x $45 = $9,000

Sale Value = 200 x $50 = $10,000

Selling Price = 1,047.64

HPR = Dividend + [ ( Sale Value - Purchase Value ) - Brokerage Fee ) / Purchase value ]

HPR = $ + [ ( $10,000 - $9,000 ) - $25 ) / $9,000 ] = 0.108 = 10.8%