What Would Be the Return on a Stock Purchased at $20

question 61

Multiple Choice

What would be the return on a stock purchased at $20 per share, held for five years, and sold for $32.22? Ignore brokerage commissions and tax implications and assume the stock paid no dividends during the holding period. Round to the nearest whole percent if necessary.

• A)3 percent
• B)10 percent
• C)15 percent
• D)16 percent

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Definitions:

Law of Diminishing Returns

This economic law states that after a certain point, successive increments of a single factor of production yield progressively smaller increases in output.

Competitive Market

A market environment where numerous producers and consumers interact, leading to price competition and variety in products.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital, in the production process.

Purely Competitive

Characterizes a market structure where many competitors sell identical products, ensuring no single seller can influence market prices.