One year ago, you purchased 400 shares of Southern Cotton at $38.40 a share. During the past year, you received a total of $480 in dividends. Today, you sold your shares for $41.10 a share. What is your total return on this investment?

Question

Quizplus · Accepted Answer

To calculate the total return on the investment, we need to consider both the capital gain and the dividends received.

Capital gain = (selling price - purchase price) / purchase price = (41.10 - 38.40) / 38.40 = 0.0703 or 7.03%

Dividends = $480

Total return = Capital gain + Dividends = 7.03% + ($480 / (400 x $38.40)) = 10.16%

Therefore, the correct answer is C, 10.16 percent.

One Year Ago, You Purchased 400 Shares of Southern Cotton