Question

Greg purchased stock in Bear Stearns and Co. at a price of $88 per share one year ago. The
company was acquired by JP Morgan at a price of $11 per share. What is Gregʹs return on his
investment?
A) -87.50%
B) -113.75%
C) -100.62%
D) -96.25%

Answer 1

Answer:

A) -87.50%

Explanation:

The computation of the return on the investment is shown below:

= (Acquired price by JB Morgon - purchase price per share) ÷ (purchase price per share)

= ($11 per share - $88 per share) ÷ (88 per share)

= - ($77 per share) ÷ (88 per share)

= -87.50%

We simply take the difference of the price and then divide it with the purchase price per share so that the correct percentage can come.