Nano-Motors Corp. has stock outstanding which sells for $10 per share. Macro-Motors, Inc. shares cost $50 each. Neither stock pays dividends at present.
a. An investor buys 100 shares of Nano-Motors. A year later, the stock sells for $15. Calculate the total return in dollar terms and in percentage terms.
b. Another investor buys 100 shares of Macro-Motors stock. A year later, the stock has risen to $56. Calculate the total return in dollar terms and in percentage terms.
c. Why is it diffi cult to say which investor had a better year?