Suppose a stock had an initial price of $85 per share, paid a dividend of $1.60

Question

Suppose a stock had an initial price of $85 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $72.00.

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

What was the dividend yield? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

What was the capital gains yield? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Suppose a stock had an initial price of $85 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $72.00.

Explanation / Answer

Initial price $ 85

Dividend $ 1.60

Ending price $ 72

Percentage total return would be

Ending price - initial price + dividends / initial price

= 72-85+1.60 = -13.41%

Dividend yield would consider only dividends received irrespective of the ending price

= 1.6/85 = 1.88%

Capital gain yield would consider only inital and final price, no dividends would be considered

= (72-85)/85

= -15.29%

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