Problem 10-1 Calculating Returns [LO 1] Suppose a stock had an initial price of

Question

Problem 10-1 Calculating Returns [LO 1]

Suppose a stock had an initial price of $99 per share, paid a dividend of $2.20 per share during the year, and had an ending share price of $120.

Requirement 1: 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).) Percentage total return %

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).) Dividend yield %

Requirement 3: 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).) Capital gains yield %

Explanation / Answer

Requirement 1: Total return = [($120 + $2.20) / $99 - 1] * 100%

= 23.43%

Requirement 2: Dividend yield = $2.20 / $99 * 100%

= 2.22%

Requirement 3: Capital gains yield = [$120 / $99 - 1] * 100%

= 21.21%

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