You purchased a stock for $50 per share and sold it one year later for $60....
You purchased a stock for $50 per share and sold it one year later for $60. Over that time period, it also paid dividends totaling $2 per share. What were your dollar return and your percentage return on the investment?
- $10 and 20% because you don’t include dividends in returns.
- $12 and 24% because you do include dividends in returns.
- $12 and 20% because you include dividends in dollar returns, but not percentage returns.
- It depends on whether arithmetic or geometric mean is used.
Homework Answers
Dollar return = Selling price+dividend-purchase price = 60+2-50 = 12
Percentage return = Dollar return/purchase price = 12/50=24%
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