Suppose a stock had an initial price of $84 per share, paid a dividend of $1.50

Question

Suppose a stock had an initial price of $84 per share, paid a dividend of $1.50 per share during the year, and had an ending share price of $71.50. Requirement 1: 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).) Requirement 2: 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).) Requirement 3: 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).)

Explanation / Answer

1.

Percentage total return = ((Final Price - Initial Price) + Dividend )/ Initial Price

Percentage total return = ((71.5- 84) + 1.5)/84 = -13.09%

2.

Dividend Yield = Dividend / Initial Price = 1.5/84 = 1.78%

3.

Capital Gains yield = (Final Price - Initial Price) / Initial Price = (71.5 – 84)/84

Capital Gains yield = -14.88%

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