Suppose an Investor Purchased 100 Shares of JDSU Stock at a Price

question 35

Essay

Suppose an investor purchased 100 shares of JDSU stock at a price of $50 per share on December 31, 2011.On December 31, 2012, JDSU paid dividends of $1.50 per share, and the investor received the dividends, then sold the stock at a price of $65 per share.
a.If there were no taxes or inflation, what was the total return?
b.If there were no taxes, but inflation was 3.5 percent, what was the real return?
c.If the tax rate was 15 percent on dividends and capital gains, what was the after-tax real return?

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Definitions:

Partnership

A legal form of business operation between two or more individuals who share management and profits.

UPA

Uniform Partnership Act, which governs the operation of partnerships within the United States.

Legal Entity

A legal entity is any company or organization that has legal rights and responsibilities, including the ability to enter into contracts, sue, and be sued.

Unlimited Liability

A legal obligation where an individual's responsibility for debts extends beyond what was invested into a business, potentially affecting personal assets.