You Purchased a Stock Five Months Ago for $40 a Share

question 88

Multiple Choice

You purchased a stock five months ago for $40 a share. Today, you sold that stock for $44 a share. The stock pays no dividends. What was your annualized rate of return?

• A) 23.93 percent
• B) 24.77 percent
• C) 25.70 percent
• D) 26.03 percent
• E) 27.67 percent

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Definitions:

Simple Interest

Interest earned or paid on the initial principal amount of an investment or loan.

Exact Interest

A method of calculating interest based on a 365-day year or the actual number of days in a year.

365-Day Year

A method used in finance that assumes a year has 365 days and is used for calculating interest rates or other financial metrics.

Total Amount

The complete sum of money required or received, often including principal, interest, taxes, and fees.