Question

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Suppose a stock had an initial price of $32 per share, paid a dividend of $2.44...

Suppose a stock had an initial price of $32 per share, paid a dividend of $2.44 per share during the year, and had an ending share price of $29. Compute the percentage total return. Enter the answer in 4 decimals e.g. 0.1234.

Calculate the arithmetic average of the following returns.

Year Return

1 0.27

2 0.13

3   -0.11

4   -0.09

5 0.08

Enter the answer with 4 decimals, e.g. 0.1234.

Solutions

Expert Solution

1) Percentage total return = (Ending price - Initial price + Dividend) / Initial price = ($29 - $32 + $2.44) / $32 = -0.0175

2) Arithmetic average = (0.27 + 0.13 - 0.11 - 0.09 + 0.08) / 5 = 0.0560

jeff jeffy answered 2 years ago
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