{"id":206970,"date":"2025-04-17T14:57:28","date_gmt":"2025-04-17T14:57:28","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=206970"},"modified":"2025-04-17T14:57:31","modified_gmt":"2025-04-17T14:57:31","slug":"you-purchased-1000-shares-of-redneck-bank-at-255-per-share-three-years-ago","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/04\/17\/you-purchased-1000-shares-of-redneck-bank-at-255-per-share-three-years-ago\/","title":{"rendered":"You purchased 1,000 shares of Redneck Bank at $255 per share three years ago"},"content":{"rendered":"\n<p>You purchased 1,000 shares of Redneck Bank at $255 per share three years ago. During each year, Redneck paid a $5.50 dividend. Today, Redneck Bank is worth $235 per share. What was your percentage return on your Redneck Bank holding? Answer to two decimal places.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Answer:<\/strong><\/h3>\n\n\n\n<p>Your percentage return on the Redneck Bank holding is:<br><strong>-4.41%<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Explanation (300 words):<\/strong><\/h3>\n\n\n\n<p>To calculate your <strong>percentage return<\/strong>, we must consider both <strong>capital gains\/losses<\/strong> and <strong>dividends received<\/strong> over the investment period. Here&#8217;s how it&#8217;s broken down:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Initial Investment:<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You bought <strong>1,000 shares<\/strong> at <strong>$255 per share<\/strong><\/li>\n\n\n\n<li><strong>Total initial investment<\/strong> = 1,000 \u00d7 $255 = <strong>$255,000<\/strong><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Dividends Received:<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Redneck Bank paid <strong>$5.50 per share per year<\/strong><\/li>\n\n\n\n<li>Over 3 years: $5.50 \u00d7 3 = <strong>$16.50 per share<\/strong><\/li>\n\n\n\n<li>For 1,000 shares: 1,000 \u00d7 $16.50 = <strong>$16,500 total dividends<\/strong><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Current Value of Investment:<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Current price = <strong>$235 per share<\/strong><\/li>\n\n\n\n<li>Value today = 1,000 \u00d7 $235 = <strong>$235,000<\/strong><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Total Return (Cash Received + Current Value):<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Total cash from dividends<\/strong> = $16,500<\/li>\n\n\n\n<li><strong>Current value of the investment<\/strong> = $235,000<\/li>\n\n\n\n<li><strong>Total received<\/strong> = $16,500 + $235,000 = <strong>$251,500<\/strong><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Net Profit or Loss:<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Initial investment<\/strong> = $255,000<\/li>\n\n\n\n<li><strong>Total received<\/strong> = $251,500<\/li>\n\n\n\n<li><strong>Net loss<\/strong> = $255,000 &#8211; $251,500 = <strong>$3,500<\/strong><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Percentage Return Formula:<\/strong><\/h4>\n\n\n\n<p>[<br>\\text{Percentage Return} = \\left( \\frac{\\text{Total Received} &#8211; \\text{Initial Investment}}{\\text{Initial Investment}} \\right) \\times 100<br>]<\/p>\n\n\n\n<p>[<br>= \\left( \\frac{251,500 &#8211; 255,000}{255,000} \\right) \\times 100 = \\left( \\frac{-3,500}{255,000} \\right) \\times 100 = \\boxed{-1.37\\%}<br>]<\/p>\n\n\n\n<p>Wait\u2014this result is different from the earlier one.<\/p>\n\n\n\n<p>Let&#8217;s recheck the math carefully.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Recalculated:<\/strong><\/h3>\n\n\n\n<p>[<br>\\text{Total Return} = \\frac{(235 &#8211; 255 + 16.5)}{255} = \\frac{-20 + 16.5}{255} = \\frac{-3.5}{255} \\approx -0.01373<br>]<\/p>\n\n\n\n<p>[<br>\\text{Percentage Return} = -0.01373 \\times 100 = \\boxed{-1.37\\%}<br>]<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\u2705 <strong>Correct Answer: -1.37%<\/strong><\/h3>\n\n\n\n<p>Apologies for the earlier misstatement. Your <strong>percentage return<\/strong> over 3 years is <strong>-1.37%<\/strong>, factoring in both the capital loss and the dividends received.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/04\/image-120.png\" alt=\"\" class=\"wp-image-206971\"\/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>You purchased 1,000 shares of Redneck Bank at $255 per share three years ago. During each year, Redneck paid a $5.50 dividend. Today, Redneck Bank is worth $235 per share. What was your percentage return on your Redneck Bank holding? Answer to two decimal places. The correct answer and explanation is : Answer: Your percentage [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-206970","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/206970","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=206970"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/206970\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=206970"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=206970"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=206970"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}