You purchase 1000 shares of Spears Grinders, Inc. stock for $45 per sh

QUESTION

You purchase 1000 shares of Spears Grinders, Inc. stock for $45 per share. A year later, the stock pays a dividend of $1.25 per share and it sells for $49.a) calculate your total dollar return.b) Calculate your total percentage return.C) do the answers to (a) and (b) depend on whether you sell the s
a) Total Dollar Return for shares = (number of shares) x (income capital gain or loss) 1,000 (shares) x $1.25 (income received as dividend per share) $4 (capital gain received per each share) = $5,250 b)Total Percentage Return = Total Dollar Return / Initial Investment $5,250 / $45,000 ($45 per share x 1,000 shares) = 11.67%

Whether you sell it or not it doesnt matter because the calculations are always based on the end of year information. If you sell it just means that you actually get the money but that will not affect the calculations.

ANSWER:

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