p 6-1. You purchase 1,000 shares of Spears Ginders, Inc stock for $45 per share. A year later, the stock pays a dividend of $1.25 per share, and it sells for $49.
a) Calculate your total dollar return
b) Calculate your total percentage return
c) Do the answers to parts (a) and (b) depend on whether you sell the stock after one year or continue to hold it?
P6-4. Nano-Motors Corp. has stock outstanding which sells for $10 per share. Macro-Motors, Inc. share cost $50 each. Neither stock pays dividends at present.
a) An investor buys 100 shares of Nano-Motor. A year later, the stock sells for $15. Calculate the total return in dollar terms and in percentage terms.
b) Another investor buys 100 shares of Macro-Motors stock. A year later, the stock has risen to $56. Calculate the total return in dollar terms and in percentage terms.
c) Why is it difficult to say which investor had a better year?