Suppose you purchased 16 shares of Diamond Company stock for $24.22 per share on May 1, 2016.
Question:
Suppose you purchased 16 shares of Diamond Company stock for $24.22 per share on May 1, 2016. On September 1 of the same year, you sold 12 shares of the stock for $25.68 per share. Calculate the holding period dollar gain for the shares you sold, assuming no dividend was distributed, and calculate the holding-period rate of return.
Step by Step Answer:
Holding Period Ga...View the full answer
Foundations Of Finance
ISBN: 9780135160619
10th Edition
Authors: Arthur J. Keown, John H. Martin, J. William Petty
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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