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    Calculating total Dollar Return and Rate of Return

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    1. If I bought 400 shares of AllTell stock for $15 per share and one year later, sold the stock for $21 per share, and receive a $0.90 cash dividend:

    a.What is the total dollar return earned for the year?

    b.What is the rate of return (percentage) earned?

    2. If Michelle purchased 100 shares of Home Depot common stock at the beginning of January for $25. She received a $1.25 dividend payment from the company at the end of December. At that time, the stock was selling for $27.50 per share.

    a.What is the dollar return earned by Michelle during the year?

    b.What is the rate of return (percentage) earned by Michelle?

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    Solution:

    1.If I bought 400 shares of AllTell stock for $15 per share and one year later, sold the stock for $21 per share, and receive a $0.90 cash dividend:

    a. What is the total dollar return earned for the year?

    Dollar return=Change in market Value of stock+ Dividend income
    Change in market value per share =($21-$15)=$6
    Dividend ...

    Solution Summary

    There are two problems. Solution to these problems explain the steps to calculating dollar return and rate of return.

    $2.19

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