Nico bought 500 shares of a stock for $24.00 per share on january 1, 2013. he received a dividend of $2.50 per share at the end of 2013 and $4.00 per share at the end of 2014. at the end of 2015, nico collected a dividend of $3.00 per share and sold his stock for $20.00 per share. what is nico's realized total rate of return?

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Business

Darien Meza

22 February, 05:25

Nico bought 500 shares of a stock for $24.00 per share on january 1, 2013. he received a dividend of $2.50 per share at the end of 2013 and $4.00 per share at the end of 2014. at the end of 2015, nico collected a dividend of $3.00 per share and sold his stock for $20.00 per share. what is nico's realized total rate of return?

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Alaina Wolfe · Answer 1

Initial investment on Jan 1, 2013 = (500 shares) * ($24 per share) = $12,000

Dividend collected at the end of 2013 = $2.50*500 = $1,250

Dividend collected at the end of 2014 = $4*500 = $2,000

Dividend collected at the end of 2015 = $3*500 = $1,500

Mony received from sellng the 500 shares at the end of 2015 = $20*500 = $10,000

Total returns at the end of 2015 = 1,250+2,000+1,500+10,000 = $14,750

Net gains = 14750 - 12000 = $2,750

Duration = 3 years

Realized total rate of return = 2750/12000 = 0.2292 = 22.9%

Answer: 22.9%