To determine the stock price's rate of return (percent increase) for company XYZ over the year, follow these steps:
1. Identify the Initial and Final Stock Prices:
- Initial stock price at the start of the year: \[tex]$40 per share.
- Final stock price at the end of the year: \$[/tex]60 per share.
2. Calculate the Change in Stock Price:
- Change in stock price = Final price - Initial price
- Change in stock price = \[tex]$60 - \$[/tex]40
- Change in stock price = \[tex]$20
3. Calculate the Rate of Return:
- Rate of return is the change in stock price expressed as a percentage of the initial stock price.
- Rate of return = (Change in stock price / Initial price) * 100
- Rate of return = (\$[/tex]20 / \$40) 100
- Rate of return = 0.5 100
- Rate of return = 50%
Therefore, the stock price's rate of return (percent increase) for company XYZ over the year is 50%.
Given the options:
A) 66%
B) 20%
C) 40%
D) 50%
The correct answer is D) 50%.
