If a stock is purchased for $25 per share and held one year,during which time a $1.75 dividend is paid and the price climbs to $29.5,the nominal rate of return is:
A) 13.00%.
B) 14.00%.
C) 20.00%.
D) 25.00%.

Question

Quizplus · Accepted Answer

The nominal rate of return is calculated by adding the dividend received to the capital gain and then dividing by the initial price. Here, the capital gain is $29.5 - $25 = $4.5, and the dividend is $1.75. So, the total return is $4.5 + $1.75 = $6.25. The nominal rate of return is ($6.25 / $25) * 100% = 25.00%.

If a Stock Is Purchased for $25 Per Share and Held