Holiday Markets pays a constant dividend of $2. At the end of trading on Wednesd

Question

Holiday Markets pays a constant dividend of $2. At the end of trading on Wednesday, the price of its stock was $43.16. At the end of trading on Thursday, the stock price was $44.08. The dividend yield _____ from Wednesday to Thursday while the capital gains yield _____ over that period. a. remained constant; remained constant b. increased; remained constant c. increased; increased d. decreased; remained constant e. decreased; decreased To whoever answers this can you please write down the calculator inputs please? I'd like to be able to do these on my own and giving me the answer alone doesn't help me. Thank you.

Explanation / Answer

since dividend is constant the dividend yield is decreasing as the price is increasing as dividend yield will be D/Po and since the price increased the capital gains yield will also increase. use the formula P1-Po / Po for the first case: 2/43.16 and 2/44.08 are dividend yields. capital gains yield: 44.08-43.16 / 43.16

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