Question 2. 2. If an investor purchases a share of stock for $300, collects a dividend during the year equal to $35 a share, and sells the stock at the end of the year for $289, what is the investor’s return for the year? (Points : 1)
12.11%
8.30%
8.00%
15.33%
return on stock = 289+35 = 324
profit = 24
rate of return = 24/300 = .08 = 8%
To calculate the investor's return for the year, you need to consider both the dividend received and the change in the stock price.
First, let's calculate the dividend yield. The dividend yield is calculated by dividing the annual dividend by the purchase price of the stock:
Dividend Yield = (Dividend / Purchase Price) * 100
Dividend Yield = ($35 / $300) * 100
Dividend Yield = 11.67%
Next, let's calculate the capital gain/loss. The capital gain/loss is the difference between the sale price and the purchase price of the stock:
Capital Gain/Loss = Sale Price - Purchase Price
Capital Gain/Loss = $289 - $300
Capital Gain/Loss = -$11
Now, let's calculate the investor's return:
Return = Dividend Yield + Capital Gain/Loss
Return = 11.67% + (-$11)
Return = 0.117 - $11
Return = -$10.88
Since the return is negative, it means that the investor has incurred a loss.
Therefore, none of the given answer choices (12.11%, 8.30%, 8.00%, 15.33%) are correct.