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2. A one-period rate of return from an investment can be measured as: Rate of Return (Ending
Value-Beginning Value)+ Income/Beginning Value. If a share of stock goes from $20 to $22 in
one year and also pays a dollar in dividends during the year, what is the rate of return for the
period? (L01-1)
Solution
Rate of return = ( Ending value + dividends - Beginning value) / beginning value
Rate of return = ( 22 + 1 - 20 ) / 20
Rate of return = 3 / 20
Rate of return = 0.15 or 15%

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2. A one-period rate of return from an investment can be measured as.pdf

  • 1. 2. A one-period rate of return from an investment can be measured as: Rate of Return (Ending Value-Beginning Value)+ Income/Beginning Value. If a share of stock goes from $20 to $22 in one year and also pays a dollar in dividends during the year, what is the rate of return for the period? (L01-1) Solution Rate of return = ( Ending value + dividends - Beginning value) / beginning value Rate of return = ( 22 + 1 - 20 ) / 20 Rate of return = 3 / 20 Rate of return = 0.15 or 15%