Stock Example

Let?s suppose that the investor buys some stocks for 20,000 monetary units on March 1st. On June 30th the investor sells the same stocks in 215,000 monetary units, once the operation expenses are deduced. During the period of time the investor has had the stocks, the investor has received dividends for about 2,000 monetary units, and has collected 4,000 monetary units for the sale of the subscription rights of an extension (additional) capital the company that issued the stocks had alone.

To calculate the profitability of these stocks, one can follow the following process:

Annual profit = Investment incomes   x 365   x   100

Investment           days

In this case, the incomes the investment has provided are:

Dividends   2,000 m.u.

Subscription rights  4,000 m.u.

Surplus (215,000 – 300,000)                 15,000 m.u.

Investment incomes                     21,000 m.u.

As the investment has been 200,000 monetary units and the investment term 91 days, the annual profit is:

Profit   =   21,000   x   365   100   =   42,11%
                                                200,000         91

Thus, the investment annual profit of stocks is 42.11%. One should deduct taxes the investor has to pay for received incomes from the profit and add the fiscal deductibles obtained thanks to the investment, if any.

On the previous example, reality has been simplified by supposing that all incomes have occurred at the end of the period taken into account. if the stock investment has had more than a year long-term, one will have to use the internal profitability rate to estimate the average annual profit.

In the stock market, quoted stocks are divided into groups based on the companies main activity. The basic groups are usually the following:

  • Electric and gas
  • Banks
  • Chemical
  • Cement and construction
  • Commerce and finances
  • Real estate investment society – new technologies
  • Real estate
  • Metallurgic and automotive
  • Feed
  • Textiles and papers
  • Varied services