Question: Given the following information, select the most representative or most correct answer that compares the total rate of return for Stock A and Stock B
Given the following information, select the most representative or most correct answer that compares the total rate of return for Stock A and Stock B over a 12- month holding period for each. Stock A pays an annual dividend of $0.50 and is purchased at $10. Over the next 12-months, the stock price for A increases 50%. Stock B has NO dividend and is purchased at $20. Over the next 12-months, the stock price for B increases to $31. The total rate of return for A is greater than B at the end of the 12-month holding period. At the end of the 12-month holding period, the total rate of return is the same for A and B. At the end of the 12-month holding period the total rate of return for B is greater than A. Since A pays a dividend, while B has NO dividend, it can be inferred that the total return for A is greater than B when comparing the two stocks at the end of the 12-month holding period
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