At the beginning of the year, a stock's share price was $60. In March, it had a 3:5 reverse split and in June it paid $5 dividends. It closed the year with the share price of $45. What was the return for the stock for the year?
-46.67% |
||
33.33% |
||
-16.67% |
||
38.89% |
Return for the year:
= (Ending value+Dividends-Beginning value)/Beginning value
= ($45×5+$5×5-$60×3)/($60×3)
= ($225+$25-$180)/$180
= $70/$180
= 38.89%
Hence, correct option is 38.89%
To calculate the return for the stock for the year, we need to consider the change in stock price and any dividends paid.
Given information:
Beginning share price: $60
Reverse split in March: 3:5
Dividends paid in June: $5
Year-end share price: $45
To calculate the return for the stock for the year, we'll follow these steps:
Adjust for the reverse split: After the reverse split, the new share price can be calculated as (old share price / reverse split ratio). In this case, the reverse split ratio is 3:5, which means the new share price is (60 / (3/5)) = $100.
Calculate the total return without dividends: Total return without dividends = (Year-end share price - Beginning share price) / Beginning share price * 100 Total return without dividends = (45 - 60) / 60 * 100 Total return without dividends = -15 / 60 * 100 Total return without dividends = -25%
Calculate the total return with dividends: Total return with dividends = (Year-end share price + Dividends paid - Beginning share price) / Beginning share price * 100 Total return with dividends = (45 + 5 - 60) / 60 * 100 Total return with dividends = -10 / 60 * 100 Total return with dividends = -16.67%
Therefore, the return for the stock for the year, considering both the change in stock price and dividends, is approximately -16.67%. Thus, the correct answer is -16.67%.
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