What is your annual rate of return if you invest $1,000 in a stock on January 1,2017 and it increases in value by $50 by January 2,2018,and pays four dividends of $12.50?
A)0%
B)5%
C)10%
D)15%

Question

Quizplus · Accepted Answer

First, calculate the total dividends received: 
4 dividends of $12.50 = $50

Then, calculate the total value of the investment at the end of January 2, 2018: 
Initial investment of $1,000 + increase in value of $50 + dividends received of $50 = $1,100

Next, calculate the percentage increase in value: 
($1,100 - $1,000) / $1,000 = 0.10 or 10%

Therefore, the annual rate of return is 10%.

What Is Your Annual Rate of Return If You Invest