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. Capital gain per share is $19.50 - $18.00 = $1.50. Total capital gain is $1.50 * 1,000 = $1,500. Total dividends received are $0.75 * 1,000 = $750. Total return is $1,500 + $750 = $2,250. The percentage return is ($2,250 / $18,000) * 100% = 12.50%.

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