Mr. San some withdrew $1000 from a savings account and invested it in common stock . At

Question:

Mr. San some withdrew $1000 from a savings account and invested it in common stock. At the end of 5 years, he sold the stock and received a check for $1307. If Mr. Sansome had left his $1000 in the savings account, he would have received an interest rate of 5%, compounded quarterly. Mr. Sansome would like to compute a comparable interest rate on his common stock investment. Based on quarterly compounding, what nominal annual interest rate did Mr. Sansome receive on his investment in stock? What effective annual interest rate did he receive?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...