Question

You bought 400 shares of stock at a total cost of $8,002. You received a total of $520 in dividends and sold your shares for $18.25 a share. What was your total rate of return? 3.67% -2.04% -1.29% 7.24% -2.27%

Answer 1

Total Rate of Return

The Total Rate of Return is calculated as follows

Total Rate of Return = [{(Sale Proceeds – Purchase Cost) + Dividend Received} / Purchase Cost] x 100

Sale Proceeds = $7,300 [400 Shares x $18.25 per share]

Purchase Cost = $8,002

Dividend Received = $520

Therefore, the Total Rate of Return = [{(Sale Proceeds – Purchase Cost) + Dividend Received} / Purchase Cost] x 100

= [{($7,300 - $8,002) + $520} / $8,002] x 100

= [(-$702 + $520) / $8,002] x 100

= [-$182 / $8,002] x 100

= -2.27% (Negative)

“Hence, the total rate of return would be -2.27% (Negative)”