You purchased 200 shares of preferred stock on January 1, 2002 for $42.27 per share. The stock pays an annual dividend of $7 per share. On December 31, 2002 the market price is $46.88 per share. What is your total dollar return for the year?

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Quizplus · Accepted Answer

The total dollar return includes both the capital gains and the dividends received. The capital gain per share is $46.88 - $42.27 = $4.61. For 200 shares, the total capital gain is $4.61 * 200 = $922. The total dividend income is $7 * 200 = $1,400. Therefore, the total dollar return is $922 (capital gains) + $1,400 (dividends) = $2,322.

You Purchased 200 Shares of Preferred Stock on January 1