Question

Tommy wishes to determine the return on two stocks she owned in 2019. At the beginning of the year, stock X traded for $81per share. During the year, X paid dividends of $5 At the end of the year, Xstock was worth $72 Calculate the annual rate of return, r, for X (Enter the answer in % format without % sign -> 20.51 and not 20.51% or 0.2051)

Answer 1

The annual rate of return based on the information is 1.24%

How to calculate the annual rate?

Based on the information given, the annual rate of return will be:

= (Future price + Dividends - Last year price)/ Lat year price × 100

= (72 + 5 - 81)/81 × 100

= 1/81 × 100

= 0.0124

= 1.24%

Therefore, the annual rate of return is 1.24%.

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