rates of return Blaxo Balloons manufactures and distributes birthday balloons. A

Question

rates of return

Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for dollar20.49 but by year end it was only dollar18.51. If the firm paid a total cash dividend of dollar 1.56 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? The rate of return you would have earned is squarebox%. (Round to two decimal places.)

Explanation / Answer

Answer:  Rate of Return=(ending price+cash distribution (dividend)-beginning price)/(beginning price)

=(18.51+1.56-20.49)/20.49

=(-0.42/20.49)*100=-2.05%

Rate of return if firm has paid no cash dividend:

=(18.51-20.49)/20.49

=(-1.98/20.49)*100=-9.66%

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