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25 May, 02:50

If a stock is purchased for $25 per share and held one year, during which time a $1.75 dividend is paid and the price climbs to $29.5, the nominal rate of return is:

A. 13.00%.

B. 14.00%.

C. 20.00%.

D. 25.00%.

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Answers (1)
  1. 25 May, 05:45
    0
    Nominal rate of return

    = Future price - Current price + Dividend paid x 100

    Current price

    = $29.50 - $25.00 + $1.75 x 100

    $25

    = $6.25 x 100

    $25

    = 25%

    Explanation:

    The nominal rate of return equals future price minus current price plus dividend paid divided by current market price multiplied by 100.
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