Asked by Alanna Davis on Jul 21, 2024
Verified
An investor purchases 200 shares of a company at a purchase price of $30.00 at the start of the year. During the year, the company paid out $1.75 of dividends per share. The investor then sells all the shares at a selling price of $27.00. Determine the investor's total percentage return.
A) -4.17%
B) -5.55%
C) -6.89%
D) -7.38%
E) -9.81%
Dividends
Shares of profit paid out by a corporation to its stockholders, generally originating from the company’s revenue.
Total Percentage
Total Percentage typically refers to a complete or whole percentage value calculated from the sum or integration of individual percentage values.
Selling Price
The amount of money for which a product or service is sold in the market.
- Understand the calculation and interpretation of total percentage return on investments.
Verified Answer
CR
Christopher RepizoJul 25, 2024
Final Answer :
A
Explanation :
The total return includes both the capital loss and the dividends received. The capital loss is calculated as (Selling Price - Purchase Price) * Number of Shares = ($27.00 - $30.00) * 200 = -$600. The dividends received are $1.75 * 200 = $350. Therefore, the total return is (-$600 + $350) = -$250. The percentage return is then calculated as (Total Return / Initial Investment) * 100 = (-$250 / ($30.00 * 200)) * 100 = -4.17%.
Learning Objectives
- Understand the calculation and interpretation of total percentage return on investments.