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stock market question help!!!?
OK so I need help with this question
You want to see how Stock A has done over the past 5 years. You learn that stock A was worth 50.36 a share 5 years ago. The stock is now worth $60 a share, and has paid quarterly dividend of 20 cents a share. Based on a purchase of 100 shares, what is the return on investment of stock A over the last 5 years
2 Answers
- PrivateBankerLv 78 years agoFavorite Answer
(End price + dividends - begin price) / begin price = total return in decimal form
for each share...
dividends 0.20 * 5 yrs * 4 qtrs. per year = $4
per share...
(60 + 4 - 50.36) / 50.36 = 0.27085, or 27.085% total return (the number of shares you own won't change the % return)
to annualize...
(1.27085^1/5) - 1 = 0.0491, or 4.91% annual compound return over the 5 year period
- kswck2Lv 78 years ago
Depends on a couple of factors. Usually, but not always, the stock is adjusted each time a dividend is issued (it goes down based on the percentage of the overall dividend issued, i.e. if the dividend is 20% of the stock, it drops 20%). Also depends on whether or not the dividend is reinvested or taken as cash.
Assuming no reinvesting, the stock is worth $60-$50.36= $9.64 and add to that 20cents times 4 (quarterly) times 5 years or $4.00. Total return $13.64 per share time 100 or $136.64.
