Question

You bought a stock three months ago for $48.57 per share. The stock paid no dividends. The current share price is $53.09. What is the APR of your investment? The EAR?

Answer 1

According to the given information,

Stock price = $48.57

Current stock price = $53.09

This stock paid no dividend, so the retrun was

R = ($53.09 - $48.57) / 48.57

= 0.093 or 9.3%

For three months, the return was 9.3%

Annual percentage yield (APR) = 4 (9.3%) {Since 3months return is 9.3%, 12months return is calculated as 4 times of 3months return}

= 37.2%

Therefore, the value of APR = 37.2%

Effective Annual Return = [1 + (Annual Rate/ N)] ^N - 1

= [1 + (37.2% / 4)] ^4 - 1

= [ 1 + 0.093] ^4 -1

= [ 1.093]^4 - 1

= 1.4272 - 1

= 0.4272 or 42.72%

Answer 2

According to the given information,

Stock price = $48.57

Current stock price = $53.09

This stock paid no dividend, so the retrun was

                                 R = ($53.09 - $48.57) / 48.57

                                     = 0.093 or 9.3%

For three months, the return was 9.3%

Annual percentage yield (APR) = 4 (9.3%) {Since 3months return is 9.3%, 12months return is calculated as 4 times of 3months return}

                                               = 37.2%

Therefore, the value of APR = 37.2%

Effective Annual Return = [1 + (Annual Rate/ N )] ^N - 1

                                    = [1 + (37.2% / 4)] ^4 - 1

                                    = [ 1 + 0.093] ^4 -1

                                   = [ 1.093]^4 - 1

                                   = 1.4272 - 1

                                   = 0.4272 or 42.72%

Answer 3

APR of Investment	= Market Price - Cost Price
	= 53.09 - 48.57
	= $4.52
In %	=4.52/48.57*100
	= 9.31%
EAR of Investment	= [ 1+ (i/n)]^n - 1
	=(1+(0.0931/3))^3-1
	= 9.6%

i = APR %

n = Number of items compounded a year.

Thank you....