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At the beginning of last year an investor purchased 300 shares of common stock from MRP Corporation at $20 per share. During the year, the firm paid dividends of $1 per share. At the end of the year, the investor sold the 300 shares at $21 per share. What is the rate of return

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Bharathparasad577idn

Rate of return would be 10%

Rate of Return

  • It is actually the difference between the amount invested when stock purchased in the beginning by an investor and the investment made while selling the stock at the end.
  • It is used to measure the profit or loss made during the investment.
  • In real rate of return calculation inflation factor is taken in to the consideration but not in simple rate of return calculation.
  • IRR takes time value of money in its consideration.
  • It has been taken out on different types of assets, stocks, bonds, and many more.
  • (CAGR) Compound annual growth rate is close related concept to simple rate of return.

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