Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)
A) 12%
B) 16%
C) 32%
D) 40%

Question

Quizplus · Accepted Answer

To calculate the rate of return for owning Serox in the most recent year, we use the formula:

Rate of Return = [(Ending Price - Beginning Price) + Dividends]/Beginning Price

Plugging in the numbers, we get:

Rate of Return = [(28 - 25) + 1.10]/25
Rate of Return = 4.10/25
Rate of Return = 0.164 or 16% (rounded to the nearest percent)

Therefore, the best choice is B, 16%.

Serox Stock Was Selling for $20 Two Years Ago