Suppose you own a stock of a company that you really like, and have no intentions of selling it. The stock pays a quarterly dividend of $0.75. Suppose you purchased the stock for $15 and one year later it is worth $17.25. If you decide to sell your stock, how much has the investment returned to you? Ignore interest on quarterly dividends throughout the year:

Question

Quizplus · Accepted Answer

The investment return is calculated by considering both the capital gain and the dividends received. The capital gain is $17.25 - $15 = $2.25. The total dividends received over the year is $0.75 * 4 = $3.00. The total return is $2.25 + $3.00 = $5.25. The percentage return is ($5.25 / $15) * 100% = 35%.

Suppose You Own a Stock of a Company That You