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Assume That You Purchase 100 Shares of a Stock Today

question 44

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Assume that you purchase 100 shares of a stock today at $56.50. A year from now the stock price will rise to $100. To realize the gain, you sell all of the shares. What is the percentage rate of return, assuming the stock will not pay any dividends:


Definitions:

Overhaul

A comprehensive renovation or restoration of machinery, equipment, or systems to extend their useful life.

Special Acquisition Fees

Costs directly associated with the acquisition of an asset, business, or investment, which may include legal fees, advisory fees, and transfer charges.

Straight-Line Depreciation

A technique for distributing the expense of an asset uniformly over its lifespan.

Depreciable Cost

The total amount that can be depreciated over the life of an asset, typically the cost of an asset minus its salvage value.

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