Assume that the price of DF stock went from a price of $104 on March 2 to 146 on April 1.

With a current stock price of 146,

Invest all of your amount 14,600 in the DF stock (buy 100 shares)

Calculate the payoff and 6-month return for this investment alternative by assuming that the stock price is observed to be 50 on 6 months later.


I calculate payoff as follows

$$\pi = 100* ( 50- 146)= - 9600$$

But how can I calculate the 6 month return for this investment?

  • 1
    $\begingroup$ Ahem, if the price goes from 146 to 50 you have a negative payoff... it is $Q (P_{final}-P_{initial})$. Then the return is $(P_{final}-P_{initial})/P_{initial}$, also negative. $\endgroup$
    – nbbo2
    Commented Apr 12, 2020 at 11:16
  • 1
    $\begingroup$ Oh okay I am so sorry I did typo. Thanks I correct it. Okay, 6month return calculation is = $(P_{final} - P_{initial})/P_{initial}$ is it right? @noob2 $\endgroup$
    – 1190
    Commented Apr 12, 2020 at 11:47

1 Answer 1


Yep I would say that the payoff is accurate, and as for the return (P End - P Beginning) / P Beginning Gives the return on that asset.


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