Question

Sue purchased a stock for $25 a share, held it for one year, received a $1.34 dividend, and sold the stock for $26.45. What nominal rate of return did she earn? 10.55% 14.23% 12.09% 11.16%

Answer 1

Answer:

11.16%

Explanation:

Given that

Purchase price of stock = $25

Sale price of stock = $26.45

Dividend = $1.34

So, The computation of the nominal rate of return is shown below:

Nominal rate of return = (Sale price of the stock - purchase price of the stock + Dividend) ÷ (Purchase price of the stock)

= ($26.45 - $25 + $1.34 ) ÷  ($25)

= 11.16%