1. The rate of return on Cherry Jalopies, Inc., stock over the last five years w
ID: 2726035 • Letter: 1
Question
1. The rate of return on Cherry Jalopies, Inc., stock over the last five years was 10 percent, 11 percent,8 percent, 4 percent, and 8 percent. Over the same period, the return on Straw Construction Company’s stock was 16 percent, 18 percent, 3 percent, 1 percent, and 16 percent. What was the arithmetic average return on each stock over this period? (Enter your answers as a percent rounded to 1 decimal place. Omit the "$" sign in your response.)
2. Suppose you bought 300 shares of stock at an initial price of $52 per share. The stock paid a dividend of $.56 per share during the following year, and the share price at the end of the year was $54. Compute your total dollar return on this investment.
1. The rate of return on Cherry Jalopies, Inc., stock over the last five years was 10 percent, 11 percent,8 percent, 4 percent, and 8 percent. Over the same period, the return on Straw Construction Company’s stock was 16 percent, 18 percent, 3 percent, 1 percent, and 16 percent. What was the arithmetic average return on each stock over this period? (Enter your answers as a percent rounded to 1 decimal place. Omit the "$" sign in your response.)
Explanation / Answer
1.
9.6
So ,
2.
Capital Gain=$54-$52=$2 per share
Dividend per share=$0.56
Total Dividend=.56*300=$168
Total Capital Gain=2*300=$600
Investment=300*52=$15600
Total Gain=Capital gain +Dividend
=$600+$168=$768
Return on Investment=(Total Gain/Investment)*100
=($768/$15600)*100
=4.923%
year Cherry Straw 5 10% 16% 4 11% 18% 3 -8% -3% 2 4% 1% 1 8% 16% Total 25% 48% NO. of Years 5 5 Average (total/5) 59.6
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