1) Suppose a stock had an initial price of $50 per share, paid a dividend of $.8
ID: 2752317 • Letter: 1
Question
1) Suppose a stock had an initial price of $50 per share, paid a dividend of $.80 per share during the year, and had an ending share price of $60.
Compute the percentage total return. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Total return
%
2) Suppose a stock had an initial price of $50 per share, paid a dividend of $.80 per share during the year, and had an ending share price of $60.
What was the dividend yield and the capital gains yield? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Dividend yield
%
Capital gains yield
%
1) Suppose a stock had an initial price of $50 per share, paid a dividend of $.80 per share during the year, and had an ending share price of $60.
Explanation / Answer
1)Total return = (P1 -P0 +D) /P0
= (60 - 50 + .8) /50
= 10.8/50
= .216 OR 21.60%
2)Dividend yield = D/P0
= .8 /50
= .016 OR 1.6%
3)Capital gain yield = (P1- P 0 )/P0
= (60-50) / 50
= 10/50
= .20 OR 20%
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