A stock that sold for 22$ at the beginning of the year was selling for 24$ at the end of the year. If the stock paid a dividend of .50$ per share,what is the simple intrest rate on a investment in this stock?
The simplest answer is that it depends on what the owner paid for the stock.
I think your text wants you to use the average price of the share for the year as the basis, so (24+22)/2 = 23 and .5/23 = .022 or 2.2%
But definitely check to see what the text says to use for the basis.
To calculate the simple interest rate on an investment in this stock, we need to know the initial price of the stock. Let's assume the owner paid the initial price of $22 for the stock.
The formula to calculate the simple interest rate is as follows:
Simple interest rate = (Dividend / Initial price) * 100
In this case, the dividend is $0.50 and the initial price is $22. Plugging these values into the formula, we get:
Simple interest rate = (0.50 / 22) * 100
Calculating this, we get a simple interest rate of approximately 2.27%.
However, please note that the calculation of the simple interest rate is dependent on the assumption that the initial price of the stock is $22. If the actual initial price differs, then the simple interest rate will vary accordingly.