Question

Drew buys 100 shares of Balsamic Corporation for $23 per share. Over the next year, Balsamic pays four quarterly dividends of 35 cents per share and the share price increases to $25. What has Drew's annual return been on the stock?

Answer 1

Answer:

14.78%

Explanation:

Drew's total investment = $23 x 100 = $2,300

during the year he received 4 dividend payments = 4 x 100 shares x $0.35 per share = $140

since the stock price increased, Drew's investment is now worth $2,500

if Drew was to sell his stocks, he would earn $200 + the $140 received as dividends = $340

Drew's annual return = $340 / $2,300 = 14.78%

Answer 2

Answer:

CORRECT ANSWER = 12.2

Explanation:

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