Calculating Returns

Question 1

You purchased 100 shares of a stock at the beginning of the year at a price of $28.33 per share. Over the year the stock paid a dividend of $1.25 per share. The price of the stock at the end of the year is $37.55 per share. What is the total dollar return on your investment?

Answer 1

$1,047

Question 2

A manager bought a vending machine for $20,000 one year ago and currently has a market value of $21,500. During the year it generated $800 after-tax cash receipts. What is the rate of return of the machine?

Answer 2

11.5%

Question 3

Suppose that you bought a stock at the beginning of the year for $25 and the price at the end of the year was $35 per share. If your total rate of return on your investment was 48%, how much did the stock paid as dividend during the year?

Answer 3

$2

Question 4

Suppose that an investor owns a stock during a three-year period. The returns during these years were 10%, −5% and 3%. What is the three-year holding return?

Answer 4

7.64%

Question 5

MULTIPLE CHOICE. One year ago you bought 500 shares of firm’s stock at $37 per share. You just received a dividend of $2 per share and the stock now sells for $38. Which of the following statements is false?

A. Your capital gains were $500.

B. Your total dollar return was $1,500.

C. Your percentage return was 10.11%.

D. The capital gains yield was 2.7%.

Answer 5

C