Question

BMAN23000A (11) Using the same information as in question (10), now assume that you purchased GM stock at the closing price on December 31, 2014 and sold it at the closing price on December 30, 2015. Your realized annual return for the year 2015 is closest to: 0. 1077 A) B) C) D) 34.2% 28.7% 17.11% 23.39%

Answer 1

Answer-

Given
stock price purchase value on December 31, 2014 = $ 15.13
Selling price on December 30, 2015 = $ 18.29
The three dividends paid sum to = $ 0.1 + $ 0.1 + $ 0.12 = 0.32

The realized annual return  = ($ 18.29 + 0.32 - $ 15.13) / $ 15.13
= $ 3.48 / $ 15.13
= 0.23
= 23 %

Therefore the realized annual return = 23 % for the year 2015 on GM stock.

This value is closest to $ 23.39 % therefore (d) is the correct choice.