An investor purchases 1,000 shares of a company at a purchase price of $18.00 at the start of the year. During the year, the company paid out $0.75 of dividends per share. The investor then sells all the shares at a selling price of $19.50. Determine the investor's total percentage return.

Question

Quizplus · Accepted Answer

The total return includes both capital gains and dividends. The capital gain per share is $19.50 - $18.00 = $1.50. The dividend per share is $0.75. The total gain per share is $1.50 + $0.75 = $2.25. The percentage return is ($2.25 / $18.00) * 100% = 12.50%.

An Investor Purchases 1,000 Shares of a Company at a Purchase