Suppose you bought a $60 share a month ago. It paid a dividend of $0.37 today and then you sold it for $61. What was your return on the investment?

Question

Quizplus · Accepted Answer

To calculate the return on the investment, we need to consider both the dividend received and the capital gain (or loss) realized on selling the share.

Dividend received = $0.37

Capital gain = Selling price - Purchase price - Dividend received
= $61 - $60 - $0.37
= $0.63

Total return = Dividend + Capital gain
= $0.37 + $0.63
= $1.00

Therefore, the return on the investment is:

Return on investment = Total return / Purchase price
= $1.00 / $60
= 0.0167 or 1.67%

To convert this to a percentage, we multiply by 100 and get:

Return on investment = 1.67%

The closest option is B) 9.59%, which might be tempting to choose as it has a 9 in it. However, that answer is incorrect as it is not close to the calculated return of 1.67%.

Suppose You Bought a $60 Share a Month Ago