What Is the Return to an Investor Who Purchases a Stock

question 29

Multiple Choice

What is the return to an investor who purchases a stock for $30,receives a $1.50 dividend at the end of the year,and then sells the share for $28.50?

• A) −5%
• B) 0%
• C) 5%
• D) 10%

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Definitions:

Newly Issue Securities

Newly issued securities are financial instruments that have been recently launched into the market by a public or private entity, including stocks and bonds.

Long-term Investment

Assets or securities purchased with the intention of holding them for an extended period, typically over one year, to achieve long-term financial goals.

Stipulated Terms

Specific conditions or clauses outlined in a contract or agreement that define the obligations and rights of the parties involved.

Bonds

Fixed income investments where an investor loans money to an entity which borrows the funds for a defined period at a variable or fixed interest rate.