Jeremy purchased 200 shares of Firestone common stock at 452

Jeremy purchased 200 shares of Firestone common stock at $45.20 per share and paid a $39.95 transaction fee. A dividend of $3.12 was paid the first year he owned the stock. What was his rate of yield?

Solution

Transaction charges per share = Transaction fee / Number of stocks = 39.95/200

Transaction charges per share = $0.19975 or ~ $0.20

.

Now, we can calculate total cost per share:

Total cost of per equity share = Purchase price per share + Transaction charges per share

Total cost per equity share = $45.20 + $0.20

Total cost per equity share = $45.40

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Now, we can calculate rate of yield:

Rate of yield = 3.12 / 45.40

Rate of yield = 6.87%

Note: Keeping digits upto two decimal places.