Question

Using the data in the table to the​ right, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid.

Date Price Dividend     Jan 1 $33.52 − Feb 5 $29.98 $0.21 May 14 $31.95 $0.17 Aug 13 $31.32 $0.18 Nov 12 $39.29 $0.22 Dec 31 $42.37 −

Return for the entire period is ____%. ​(Round to two decimal​ places.)

Answer 1

January 01 to February 05:

Rate of Return, r1 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r1 = ($29.98 + $0.21 - $33.52) / $33.52
Rate of Return, r1 = -0.0993

February 05 to May 14:

Rate of Return, r2 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r2 = ($31.95 + $0.17 - $29.98) / $29.98
Rate of Return, r2 = 0.0714

May 14 to August 13:

Rate of Return, r3 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r3 = ($31.32 + $0.18 - $31.95) / $31.95
Rate of Return, r3 = -0.0141

August 13 to November 12:

Rate of Return, r4 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r4 = ($39.29 + $0.22 - $31.32) / $31.32
Rate of Return, r4 = 0.2615

November 12 to December 31:

Rate of Return, r5 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r5 = ($42.37 + $0.00 - $39.29) / $39.29
Rate of Return, r5 = 0.0784

Periodic Return = [(1 + r1) * (1 + r2) * (1 + r3) * (1 + r4) * (1 + r5)] - 1
Periodic Return = [(1 - 0.0993) * (1 + 0.0714) * (1 - 0.0141) * (1 + 0.2615) * (1 + 0.0784)] - 1
Periodic Return = 1.2943 - 1
Periodic Return = 0.2943 or 29.43%