Suppose a stock had an initial price of $87 per share, paid a dividend of $1.60

Question

Suppose a stock had an initial price of $87 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $102.

Compute the percentage total return. (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? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Compute the percentage total return. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

A)Total return =   [(P1 -P0) + D] /P0

                           = [(102-87) +1.6] /87

                          = 16.6 / 87

                         = .1908 or 19.08%

B)Dividend yield = D/ P0

                             = 1.60 / 87

                             = .0184 or 1.84%

c) Capital gain yield = (P1-P0)/ P0

                                    = (102 -87)/ 87

                                   = 15/87

                                  = .1724 OR 17.24%

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