Question

You purchased 30.00 shares of Bank of America one year ago for $8.48 per share. Today, one share trades for $9.05 and paid a dividend of $1.18 per share.

A) What is the capital gain rate from holding the stock the past year?

B) What is the dividend yield from holding the stock the past year?

C) What is the total return for holding the stock the past year?

D) Based on your number of shares purchased, what is the total dollar return of your investment?

Answer 1

Buying price of share	8.48
Today's price	9.05
Dividend	1.18
A) Capital gain rate
Capital gain rate	(Today's price - Buying price)/Buying price
Capital gain rate	(9.05 - 8.48)/8.48
Capital gain rate	0.067216981
The capital gains rate is 6.72%.
B) Dividend yield
Dividend yield	(Dividend)/Buying price
Dividend yield	(1.18/8.48)
Dividend yield	0.139150943
The dividend yield is 13.92%.
C) Total return for holding the stock for the past year
Total return	(Today's price - Buying price + dividend)/Buying price
Total return	(9.05 - 8.48 + 1.18)/8.48
Total return	0.206367925
The total return is 20.64%.
D) Total dollar return of the investment
Number of shares purchased	30
Total dollar return	30*(9.05 - 8.48 + 1.18)
Total dollar return	52.5
The total dollar return was $52.5.