All investors hold their investments for the sake of stock returns. You can make a profit with stocks both through dividends and through a bargain purchase and subsequent resale at a higher price. When conducting such transactions, it is important to determine the profitability of the stock for a specific period of time. The concept of profitability is the percentage by which there is an increase in capital over a certain period of time.
Instructions
Step 1
Try to calculate stock returns. To do this, divide the net income by the amount of the initial investment, and multiply the result by 100%. Next, determine the length of time. To calculate the return for the year, you need to divide the resulting expression by the number of months during which you were the owner of the stock.
Step 2
For example, you purchased shares of a company for 100 rubles for one, spending 10,000 rubles. After 6 months, the value of the shares was 110 rubles, and you sold them for 11,000 rubles. In this case, the calculation will look like this: (11000-10000 / 10000) * 100% * (6/12) = 0.1 * 100% * 2 = 20% per annum.
If the investor held shares for a fraction of the number of months in a year, divide 365 by the number of days the investor held shares when determining the calculation.
Step 3
The current stock return determines how profitable the stock is in terms of dividends. To calculate it, you need to divide the volume of annual dividends on a share by its current rate. For example, the cost of a share is 1,000 rubles, the payment amount is 20 rubles in dividends per year. This means that the current profitability is determined as the ratio of 20 rubles to 1000. The result of the calculations is 0, 02 or 2%. With a change in the price of a stock, their profitability also changes. For example, the rate has grown to 2,000 rubles. As a result of the calculations, you will receive 1%.
Step 4
When calculating the current profitability, the amount of the initial investment cannot be used, otherwise you will not get a changing characteristic, which is important when determining the profitability of a stock.
