Math Problem Statement
Question content area top Part 1 Compute the total and annual returns on the described investment. Five years after buying 100 shares of XYZ stock for $70 per share, you sell the stock for $ 9800. Question content area bottom Part 1 The total return is
enter your response here%. (Do not round until the final answer. Then round to one decimal place as needed.)
Solution
To compute the total return on the investment, we use the formula:
Step 1: Find the beginning and ending values.
- Beginning Value: The initial purchase cost is 100 shares at $70 per share.
- Ending Value: You sell the stock for $9,800.
Step 2: Compute the total return.
So, the total return is 40%.
Do you want more details or have any questions?
Here are 5 related questions:
- How would the total return change if the selling price was $10,000 instead of $9,800?
- How do you calculate the annualized return from the total return?
- What is the significance of the total return in investment analysis?
- How would dividends affect the total return calculation?
- What is the difference between simple return and compound return?
Tip: Always consider including transaction costs like brokerage fees when calculating actual returns on investments.
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Math Problem Analysis
Mathematical Concepts
Finance
Investment Returns
Percentage Calculation
Formulas
Total Return = ((Ending Value - Beginning Value) / Beginning Value) * 100
Annual Return = (1 + Total Return)^(1/n) - 1
Theorems
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Suitable Grade Level
Grades 10-12
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