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Suppose an Investor Buys a Share of Stock for $200

question 162

Essay

Suppose an investor buys a share of stock for $200 and sells it for $220 after one year. At the end of that year, the dividend per stock is $5. The company has 250,000 shares outstanding and a total profit for the year of $1,000,000. Calculate the rate of return on this stock for the investor.


Definitions:

Total Assets

The total of a company's assets, encompassing both current and long-term assets.

Cross-sectional Analysis

A type of analysis that examines data collected at a single point in time across multiple subjects, variables, or segments.

Economic Activities

The actions that involve the production, distribution, and consumption of goods and services in an economy.

Return on Assets

A performance metric that measures the profitability of a company relative to its total assets.

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