An investor purchases the common stock of a well-known company, Toma Inc., for $25 per share. The

Question:

An investor purchases the common stock of a well-known company, Toma Inc., for $25 per share. The expected dividend for the next year is $3 per share, and the investor is confident that the stock can be sold 1 year from now for $30. What is the implied rate of return?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...