THE PRICE OF THE STOCK OF CLARKSON CORPORATION WENT FROM $50 TO $56 LAST YEAR. THE FIRM ALSO PAID $2 IN DIVIDENDS. COMPUTE THE RATE OF RETURN
(6 + 2)/50 = 16%
To compute the rate of return, we will use the following formula:
Rate of Return = (Ending Value - Beginning Value + Dividends) / Beginning Value
Given:
Beginning Value (BV) = $50
Ending Value (EV) = $56
Dividends (D) = $2
Using the formula, we can compute the rate of return:
Rate of Return = ($56 - $50 + $2) / $50
Rate of Return = $8 / $50
To find a percentage rate of return, we can multiply the answer by 100:
Rate of Return = ($8 / $50) * 100
Rate of Return = 16%
Therefore, the rate of return for Clarkson Corporation's stock is 16%.
To compute the rate of return, we need to consider both the change in stock price and the dividends received. The formula to calculate the rate of return is:
Rate of Return = ((Ending Value - Beginning Value + Dividends) / Beginning Value) * 100
In this case, the beginning value is $50, and the ending value is $56. The dividends received are $2. Plugging these values into the formula, we can calculate the rate of return:
Rate of Return = (($56 - $50 + $2) / $50) * 100
= ($8 / $50) * 100
= 16%
Therefore, the rate of return for Clarkson Corporation's stock last year is 16%.