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The common stock of Plaxo Enterprises had a market price of $9.45 on the day you...

The common stock of Plaxo Enterprises had a market price of $9.45 on the day you purchased it just 1 year ago. During the past year, the stock paid a dividend of $1.43 and closed at a price of $11.66. What rate of return did you earn on your investment in Plaxo's stock? The rate of return you earned on Plaxo's stock is what percent?

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Answer #1

Rate of return earned on investment in Plaxo's stock :

Rate of return earned = [ ( Closing price of stock - Purchase price of stock ) + Dividend received ] / Purchase price of stock = [ ( $11.66 - $9.45 ) + $1.43 ] / $9.45 = 38.52%

Rate of return earned on Plaxo's stock :

Rate of return earned on Plaxo's stock means the capital appreciation earned on the stock

Rate of return on Plaxo's stock = [ Closing price of stock - Purchase price of stock ] / Purchase price of stock = [ $11.66 - $9.45 ] / $9.45 = 23.39%

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