You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year.

What is the total percentage return for the investment?

Question

You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year.

What is the total percentage return for the investment?

Quizplus · Accepted Answer

The total return includes both the capital gain and the dividend income. The capital gain is ($47 - $45) * 100 = $200. The dividend income is $4 * 100 = $400. So, the total return is $200 + $400 = $600. The initial investment was $45 * 100 = $4500. Therefore, the total percentage return is ($600 / $4500) * 100 = 13.3%.

You Purchase 100 Shares of Stock at a Price of $45