Question

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?

Answer 1

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%