Eight months ago, you purchased 300 shares of a non-dividend paying stock for $27 a share. Today, you sold those shares for $31.59 a share. What was your annualized rate of return on this investment?

Question

Quizplus · Accepted Answer

The annualized rate of return can be calculated using the formula for compound annual growth rate (CAGR), which is [(Ending Value/Beginning Value)^(1/n)]-1, where n is the number of years. In this case, the beginning value is $27, the ending value is $31.59, and the time period is 8/12 years (since it's 8 months). Plugging these values into the formula gives a CAGR of approximately 26.55%, which is the annualized rate of return.

Eight Months Ago, You Purchased 300 Shares of a Non-Dividend