Suppose a stock had an initial price of $65 per share, paid a dividend of $1.45...

Suppose a stock had an initial price of $65 per share, paid a dividend of $1.45 per share during the year, and had an ending share price of $58.

a, Compute the percentage total return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. What was the dividend yield and the capital gains yield? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Solutions

Expert Solution

a) the percentage total return = [P1 -P0+ D]/P0

= [58 -65 +1.45 ]/65

= -5.55/65

= - .0854 or 8.54%

b)Dividend yield =D/P0

= 1.45 /65

= .0223 or 2.23%

Capital gain yield = [P1-P0]/P0

= [58- 65]/65

= - 7/65

= - .1077 or - 10.77%

jeff jeffy answered 1 year ago

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