A year ago,Fred purchased 300 shares of RPJ stock for $14 400.The stock is currently selling for $36 a share and Fred has decided to sell all of his shares.What is the total return that Fred has earned on this investment if he received a special dividend of $5 a share?

Question

Quizplus · Accepted Answer

The total cost of the shares is:
300 shares * $48 (original cost per share including the dividend) = $14,400

The total proceeds from selling the shares is:
300 shares * $36 (current selling price per share) = $10,800

The total dividend received is:
300 shares * $5 (special dividend per share) = $1,500

Therefore, the total return earned by Fred is:
($10,800 + $1,500 - $14,400) / $14,400 = -0.1458 or -14.58%

Note that the negative sign indicates that Fred incurred a loss on his investment.

A Year Ago,Fred Purchased 300 Shares of RPJ Stock for $14