Answer:
The total return on the clients portfolio after one year is $0.
Step-by-step explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
What is a client's total return on his portfolio after one year if he invests $10,000 in each of three stocks, X,Y, and Z? He received $200 in dividends from company X, no dividend from company Y, and $300 in dividends from company Z. After one year the stock price of company X has increased 10%, the stock price of company Y has decreased 15%, and the stock price for company Z has remained unchanged and all three stocks are sold by the client.
[A] 0%
[B] 1.6%
[C] 3.3%
[D] 5.0%
The explanation of the answers are now given as follows:
Total return on a portfolio refers to the addition of dividends received and capital gains minus the capital losses from the stocks in the portfolio.
For this total return can be calculated as follows:
Total dividends received = Dividend from stock X + Dividend from stock Z = $200 + $300 = $500
Capital gains from Stock X = Amount invested in X * Percentage of appreciation = $10,000 * 10% = $1,000
Capital loss from Stock Y = Amount invested in Y * Percentage of decrease = $10,000 * 15% = $1,500
Therefore, we have:
Total return = Total dividends received + Capital gains from Stock X - Capital loss from Stock Y = $500 + $1,000 - $1,500 = $0
Therefore, the total return on the clients portfolio after one year is $0.