An investor purchases 200 shares of a company at a purchase price of $30.00 at the start of the year. During the year, the company paid out $1.75 of dividends per share. The investor then sells all the shares at a selling price of $27.00. Determine the investor's total percentage return.

Question

Quizplus · Accepted Answer

The total return includes both the capital loss and the dividends received. The capital loss is calculated as (Selling Price - Purchase Price) * Number of Shares = ($27.00 - $30.00) * 200 = -$600. The dividends received are $1.75 * 200 = $350. Therefore, the total return is (-$600 + $350) = -$250. The percentage return is then calculated as (Total Return / Initial Investment) * 100 = (-$250 / ($30.00 * 200)) * 100 = -4.17%.

An Investor Purchases 200 Shares of a Company at a Purchase