Julio purchased a stock one year ago for $27. The stock is now worth $32, and the total return to Julio for owning the stock was 37 percent. What is the dollar amount of dividends that he received for owning the stock during the year?

Question

Quizplus · Accepted Answer

To find out the dollar amount of dividends that Julio received, we need to subtract the increase in the stock's value from the total return. 
37% total return - 5% increase in stock's value = 32% return from dividends
Now we can set up the equation: 
$27 x 0.32 = $8.64 total dividends received 
However, we need to remember that we are looking for the dollar amount of dividends received in one year. We can divide the total dividends by the number of years held: 
$8.64 / 1 year = $8.64 in dividends in one year 
Rounded to the nearest dollar, Julio received $5 in dividends during the year. Therefore, the correct answer is B.

Julio Purchased a Stock One Year Ago for $27