Question 1

You purchased a stock eight months ago for $55 a share. Today, you sold that stock for $64.50 a share. The stock pays no dividends. What was your annualized rate of return?

Accepted Answer

The answer of You purchased a stock eight months ago...

Question 2

Jimmy purchased a stock for $22.22 a share, received a dividend of $.55 a share, and sold the stock after one year for $25.36 a share. What was his dividend yield on this investment?

Accepted Answer

The answer of Jimmy purchased a stock for $22.22 a...

Question 3

A single common stock share was purchased for $50.00 at the beginning of the year. The end of year stock price was $49.35. What was the amount of the annual dividend if the total return for the year was 2.3 percent?

Accepted Answer

The answer of A single common stock share was purchased...

Question 4

One year ago, you purchased 100 shares of common stock at $25.00 per share. During the past year, you received dividends of $.75 per share. Today, you sold your shares for $24.00 per share. What is your total return on this investment?

Accepted Answer

The total return is calculated by considering both the capital loss and the dividends received. The capital loss is ($24.00 - $25.00) * 100 = -$100. The dividends received are $0.75 * 100 = $75. The total return is (-$100 + $75) / ($25.00 * 100) = -$25 / $2500 = -1.00%.

Question 5

Louis owns a stock that has had an average geometric return of 10.50 percent and an average arithmetic return of 11.00 percent over the past six years. What average annual rate of return should Louis expect to earn over the next four years?

Accepted Answer

The answer of Louis owns a stock that has had...

Question 6

John began his investing program with a $6,500 initial investment. The table below recaps his returns each year as well as the amounts he added to his investment account. What is his dollar-weighted average return?
$$\begin{array} { c c c } 
\text { Time } & \text { Investment } & \text { Return } \
0 & \$ 6,500 & 7.5\% \
1 & \$ 2,500 & - 4.0 \%\
2 & \$ 3,100 & 5.0\% \
3 & \$ 3,000 & 8.0\% \
4 & \$ \quad 800 & - 1.5\%
\end{array}$$

Accepted Answer

The answer of John began his investing program with a...

Question 7

You purchased a stock for $35.00 a share and resold it one year later. Your total return for the year was 7.5 percent and the dividend yield was 1.4 percent. At what price did you resell the stock?

Accepted Answer

The total return for one year is the sum of capital gain and dividend yield. 
Total return = 7.5% + 1.4% = 8.9%
So, the selling price would be:
35.00 + (8.9% x 35.00) = $37.14 (rounded to the nearest cent)
Therefore, the answer is choice D.

Quiz 1: A Brief History of Risk and Return