Question

Dividendo 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 Jan 1 Feb 5 May 14 Aug 13 Nov 12 Dec 31 Price $33.03 $32.87 $31.01 $31.11 $39.55 $41.37 $0.18 $0.19 $0.18 $0.17 Return for the entire period is %. (Round to two decimal places.)

Answer 1

Compute the return for the entire period, using MS-excel as shown below:

F 2 5420c | B C D Entire Period Return 3 Date Price Dividend Dollar Return Percentage Return Entire Period Return 4 43831 33.03 43866 32.87 0.18 =C5+D5-C4 =E5/C4 =1+F5 6 43965 31.01 0.19 =C6+D6-C5 =E6/C5 =1+F6 7 44056 31.11 0.18 =C7+D7-C6 =E7/C6 =1+F7 8 44147 39.55 0.17 =C8+D8-C7 =E8/C7 =1+F8 44196 41.37 =C9-C8 =E9/C8 =1+F9 | 10 11 Entire Period Return =G5*G6*G7*G8*G9-1

The result of the above table is as follows:

B C D F G Entire Period Return 3 Date Price Dividend Dollar Return Percentage Return Entire Period Return 4 01-Jan-20 33.03 5 05-Feb-20 32.87 0.02 0.00060551 1.00060551 6 14-May-20 31.01 0.19 -1.67 -0.050806206 0.949193794 7 13-Aug-20 31.11 0.18 0.28 0.009029345 1.009029345 8 12-Nov-20 39.55 0.17| 8.61 0.276759884 1.276759884 31-Dec-20 41.37 1.82 0.046017699 1.046017699 10 11 Entire Period Return 0.279881727

Hence, the above table shows the return for the entire period is 27.99%.