About a year ago, Chris Beattie bought some shares in the Stratosphere Mutual Fund. He bought stock at $25.80 a share, and it now trades at $26.30. Last year the fund paid dividends of 51 cents the share and had capital gains distributions of $1.03 a share.
Using approximate yield formula, what rate of return did Chris earn on his investment? Round the answer to two decimal places.
Repeat the computation using a handheld financial calculator. Round the answer to two decimal places.
Would he have made a 20% rate of return if the stock had risen to $30 a share?