Question

Juan purchased shares in ABC company for​ $5,000 three years ago. During these three years he received​ $600 in dividends. He just sold the stock for​ $4,300. What was his total return on this​ investment?

Answer 1

Answer:

B) –2%

Explanation:

The total return on an investment is calculated by,

Total Return = Capital gains ÷ Initial Investment x 100

First we will have to calculate capital gains of his investment,

He got 600 in dividends and 4,300 after selling the stock against the initial investment of $5,000.

So capital gains,

= 600 + 4,300 - 5,000

= -100

Total Return would be,

= -100 / 5,000 x 100

= -2% is the total return on his investment.