Question

McCoy paid a one-time special dividend of $3.40 on October 18, 2010. Suppose you bought

McCoy stock for $47.00 on July 18, 2010, and sold it immediately after the dividend was paid for
$63.52 . What was your realized return from holding McCoy?
A) 4.24%
B) 6.36%
C) 33.91%
D) 42.38%

Answer 1

option (D) 42.38%

Step-by-step explanation:

Data provided in the question:

Dividend paid = $3.40

Purchase price of stock = $47.00

Selling price = $63.52

Now,

Realized Return

= [ Selling price - Purchase Price + dividend ] ÷ Purchase Price

= [ $63.52 - $47.00 + $3.40 ] ÷ $47.00

= [ $16.52 + $3.40 ] ÷ $47.00

= $19.92 ÷ $47

= 0.4238

or

= 0.4238 × 100%

= 42.38%

Hence,

The correct answer is option (D) 42.38%