Question

Using the data in the​ table, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid. Date Price Dividend   Jan 1 $ 34.96 minus Feb 5 $ 30.19 $ 0.21 May 14 $ 28.61 $ 0.19 Aug 13 $ 32.06 $ 0.21 Nov 12 $ 37.48 $ 0.18 Dec 31 $ 42.57 minus Return for the entire period is nothing​%. ​(Round to two decimal​ places.

Answer 1

January 1 to February 5:

Rate of Return, r1 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r1 = ($30.19 + $0.21 - $34.96) / $34.96
Rate of Return, r1 = -0.1304

February 5 to May 14:

Rate of Return, r2 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r2 = ($28.61 + $0.19 - $30.19) / $30.19
Rate of Return, r2 = -0.0460

May 14 to August 13:

Rate of Return, r3 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r3 = ($32.06 + $0.21 - $28.61) / $28.61
Rate of Return, r3 = 0.1279

August 13 to November 12:

Rate of Return, r4 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r4 = ($37.48 + $0.18 - $32.06) / $32.06
Rate of Return, r4 = 0.1747

November 12 to December 31:

Rate of Return, r5 = (Closing Price + Dividend - Opening Price) / Opening Price
Rate of Return, r5 = ($42.57 + $0.00 - $37.48) / $37.48
Rate of Return, r5 = 0.1358

Rate of Return for Entire Period = [(1 + r1) * (1 + r2) * (1 + r3) * (1 + r4) * (1 + r5)] - 1
Rate of Return for Entire Period = [(1 - 0.1304) * (1 - 0.0460) * (1 + 0.1279) * (1 + 0.1747) * (1 + 0.1358)] - 1
Rate of Return for Entire Period = 1.248439 - 1
Rate of Return for Entire Period = 0.2484 or 24.84%