Could you help me, anyone for this problem? This question is confusing. 1. On Ja

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Could you help me, anyone for this problem? This question is confusing.

1. On Jan 1 (pretend the market was open) you purchased 125 shares of common stock in GE for $16 per share. You sold it one year later (Dec 31) for $19 per share, and it paid a quarterly dividend of 25 cents per share during the time you held it. What is your total rate of return on this stock? ______________%

2. You purchased a stock for $50 one year ago. It is now worth $56, and it paid $7 in total dividends during the time you have held it. What is your rate of return on this stock from the dividends only? __________%

3. What is your total rate of return if you sell the stock today? _________________%

Explanation / Answer

1) Rate of Return = (Selling Price + Dividend - Purchase price)/purchase price
Rate of Return = ($19 + (.25 x 4) - $16)/ $16
Rate of Return = $4/$16 = 25%

2) a. Rate of Return = $7/$50 = 14%
Rate of Return = (Selling Price + Dividend - Purchase price)/purchase price
Rate of Return = = ($56 + $7 - $50)/$50 = 26%

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