Question

You purchase 120 shares of Apple for $100/share and paid a $10 commission. Each quarter Apple paid a $.25/share dividend. After one year sold the stock for $110/share and paid $10 commission. For the year, what is your total return?

Group of answer choices

<font face="Palatino Linotype" size="-1">$1300.00</font>

<font face="Palatino Linotype" size="-1">$1200.00</font>

<font face="Palatino Linotype" size="-1">$1180.00</font>

<font face="Palatino Linotype" size="-1">$1280.00</font>

Answer 1

Total return = Capital gain + Dividend income

Capital gain = (Selling price - Purchase price) * Number of shares - Total commission

Capital gain = (110 - 100) * 120 - (10 + 10)

Capital gain = 10 * 120 - 20

Capital gain = 1,180

Dividend income = Dividend per share * Number of shares * 4 quarters

Dividend income = 0.25 * 120 * 4

Dividend income = $120

Total return = Capital gain + Dividend income

Total return = 1,180 + 120

Total return = $1,300.00

Option A is correct