Consider the following price and dividend data for Quicksilver Inc.: Assume that you purchased Quicksilver's stock at the closing price on December 31, 2004 and sold it at the closing price on December 30, 2005. Your realized annual return for the year 2005 is closest to ________.
A)-47.4%
B)-45.1%
C)-42.9%
D)-40.6%

Question

Consider the following price and dividend data for Quicksilver Inc.:  Assume that you purchased Quicksilver's stock at the closing price on December 31, 2004 and sold it at the closing price on December 30, 2005. Your realized annual return for the year 2005 is closest to ________.
A)-47.4% 
B)-45.1% 
C)-42.9% 
D)-40.6%

Quizplus · Accepted Answer

To calculate the realized annual return, we need to use the formula:
Realized Annual Return = (Ending Price - Beginning Price + Dividends) / Beginning Price
We purchased the stock on December 31, 2004, so the beginning price is the closing price on that day, which is $22.62. We sold the stock on December 30, 2005, so the ending price is the closing price on that day, which is $11.91. 
Dividends per share for 2005 = $0.08
Realized Annual Return = ($11.91 - $22.62 + $0.08) / $22.62 = -0.4509 or -45.1%
Therefore, the closest choice is (B) -45.1%.

Consider the Following Price and Dividend Data for Quicksilver Inc