Assume that a stock pays $1 per share cash dividend and that during the year its market price increased from $20 to $25 per share. The rate of return on this stock is:

Question

Quizplus · Accepted Answer

The rate of return on the stock can be calculated by adding the dividend received to the increase in stock price, then dividing by the initial stock price. This gives: ($1 + ($25 - $20)) / $20 = $6 / $20 = 0.30 or 30%.

Assume That a Stock Pays $1 Per Share Cash Dividend