Question

You buy a stock for $55 today, and sell the stock one year later for $54, during which time a $2 dividend is paid. What is your return on this stock

Answer 1

The return on the stock is 1.82%.

Step-by-step explanation:

Your return on this stock can be calculated by considering the capital gain and the dividend received. The capital gain is the difference between the selling price and the buying price, which in this case is $54 - $55 = -$1. Notice that the capital gain is negative, indicating a loss. The dividend received is $2. To calculate the return, we add the dividend to the capital gain and divide it by the buying price. In this case, the return would be (-$1 + $2) / $55 = 1.82%, indicating a positive return despite the loss in capital gain.

Answer 2

1.82%

Step-by-step explanation:

Calculation for the return on the stock

Using this formula

Return=(Sales of stock - Stock bought today+Dividend)/Sales of stock

Let plug in the formula

Return = (54 - 55 + 2)/55

Return =1/55

Return = 0.0182×100

Return=1.82%

Therefore the return on the stock will be 1.82%