Question: Suppose that you purchase shares of a company that recently
Suppose that you purchase shares of a company that recently executed an IPO at the post-offering market price of $32 per share, and you hold the shares for one year. You then sell your shares for $35 per share. The company does not pay dividends, and you are not subject to capital gains taxation. During this year, the return on the overall stock market was 11 percent. What net return did you earn on your share investment? Assess this return in light of the overall market return.
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