You Purchase a Share of Stock for $50 and Sell

question 36

Multiple Choice

You purchase a share of stock for $50 and sell it in one year for $48. Over the year you received $4 in dividends. Your annual return was

• A) 3.8%.
• B) 4%.
• C) -4.2%.
• D) -4%.

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Definitions:

Macro Events

Large-scale events that affect the broad economy or financial markets, including political changes, natural disasters, or widespread economic shifts.

Firm-Specific Events

Events that affect a particular company directly, such as earnings reports, mergers, or product launches, which can impact the company's stock price independent of market trends.

Portfolio Risk

The level of uncertainty or potential financial loss inherent in an investment portfolio.

CAPM

The Capital Asset Pricing Model is a formula used to determine the theoretical expected return of an investment, considering its risk relative to the market.