Chapter 5, Problem 2PROB

Summary Introduction

The rate of return on an investment is the profit or loss on yields of investment which are gained by an investor.

$\text{Yield}=\frac{\left[\begin{array}{c}\left(\text{No}\text{. of shares}\times \text{Current price per share}\right)-\\ \left(\text{No}\text{. of shares}\times \text{Original price per share}\right)\end{array}\right]+\left(\begin{array}{c}\text{No}\text{. of shares}\times \\ \text{Dividend per share}\end{array}\right)}{\left(\text{No}\text{. of shares}\times \text{Original price per share}\right)}$

The number of shares to be purchased is 40 at $10 each. The current price per share is $9 and the dividend payments per share is $0.50.