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. A stock was purchased for $20.00 on Jan 1, 2011. What is the rate of...

. A stock was purchased for $20.00 on Jan 1, 2011. What is the rate of return on this stock if it is now trading for: A: &18.25

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Answer #1

Stock Price, December 31, 2011 = $18.25
Stock Price, January 01, 2011 = $20.00

Rate of Return = (Stock Price, December 31, 2011 - Stock Price, January 01, 2011) / Stock Price, January 01, 2011
Rate of Return = ($18.25 - $20.00) / $20.00
Rate of Return = -$1.75 / $20.00
Rate of Return = -0.0875 or -8.75%

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