You purchased 200 shares of preferred stock on January 1, 2002 for $42.27 per share. The stock pays an annual dividend of $5 per share. On December 31, 2002 the market price is $43.88 per
Share. What is your percentage return on investment for the year?

Question

Quizplus · Accepted Answer

The percentage return on investment is calculated as follows:(Dividend income + Capital gain) / Initial investment * 100Dividend income = $5 per share * 200 shares = $1,000Capital gain = ($43.88 - $42.27) per share * 200 shares = $322Initial investment = $42.27 per share * 200 shares = $8,454Percentage return on investment = ($1,000 + $322) / $8,454 * 100 = 15.6%

You Purchased 200 Shares of Preferred Stock on January 1