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4 August, 13:48

Drew buys 100 shares of Balsamic Corporation for $23 per share. Over the next year, Balsamic pays four quarterly dividends of 35 cents per share and the share price increases to $25. What has Drew's annual return been on the stock?

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  1. 4 August, 14:05
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    14.78%

    Explanation:

    Drew's total investment = $23 x 100 = $2,300

    during the year he received 4 dividend payments = 4 x 100 shares x $0.35 per share = $140

    since the stock price increased, Drew's investment is now worth $2,500

    if Drew was to sell his stocks, he would earn $200 + the $140 received as dividends = $340

    Drew's annual return = $340 / $2,300 = 14.78%
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