Stocks represent shares of ownership in a company. People invest in the company by buying stocks and measure the rate of return by the percentage increase or decrease in the stock's price. The return is measured using percentages because investors want to know how much they are getting based on the size of their investment. For example, a $5 loss on a $9 stock is more significant than a $5 loss on a $210 stock.
Things You'll Need
Consult your financial records to determine the price you paid for the stock and the sales price of the stock. For example, you may have bought a stock for $50 and sold it for $44.
Subtract the original price from the sales price to find the gain or loss. In this example, you would subtract $50 from $44 to get -$6.
Divide the gain or loss by the original price to find the rate of return expressed as a decimal. Continuing this example, you would divide $-6 by $50 to get -0.12.
Multiply the rate of return expressed as a decimal by 100 to convert it to a percentage. Finishing this example, you would multiply -0.12 by 100 to find you had a rate of return of -12 percent.
- Photo Credit graph image by Attila Toro from Fotolia.com
How to Increase Business Visibility
In a crowded and noisy marketplace, making your business stand out is crucial. Consumers have more options than ever, whether they’re planning...
How to Calculate a Stock's Realized Annual Return
If you already have or are considering investing in multiple stocks, compare their annual performances. If they have different prices, simply comparing...
How to Calculate Rate of Return
In order to calculate rate of return, a person needs their current value, how much their investments are worth and how much...