Question

# On January 1, you bought 10 shares of Google for \$700 per share. In the middle...

On January 1, you bought 10 shares of Google for \$700 per share. In the middle of the year Google stock price was \$900 when it announced a three-to-one split. At the end of the year
9Google paid \$5 per share dividend and the ex-dividend share price was \$305. What is the annual rate of return on your investment?

Annual return =[( Value of Investment at the end of the year - Initial Investment) + DIvidend received ] / Initial Investment * 100

Value of Investment at the end:= No. of shares bought * Split rateio * Yean End price

= 10*3*305

= \$ 9150

Dividend = No. of shares bought * split ratio * dividend per share

= 10*3*5

= \$ 150

Initial Investment = NO. of shares boght * Purchase price

= 10 * \$ 700

= \$ 7000

Annual return =[( Value of Investment at the end of the year - Initial Investment) + DIvidend received ] / Initial Investment * 100

= [ (\$ 9150 - \$ 7000) + \$ 150 ] / \$ 7000 * 100

= [ (\$ 2150 + \$ 150) / \$ 7000 ] * 100

= \$ 2300 / \$ 7000 * 100

= 0.3286 i.e 32.86%

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