Suppose a stock had an initial price of $80 per share, paid a dividend of $.60 p

Question

Suppose a stock had an initial price of $80 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $72.

Compute the percentage total return. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What was the dividend yield and the capital gains yield? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Suppose a stock had an initial price of $80 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $72.

Explanation / Answer

Answer:

a) Return from a stock = {(Dividend + Ending stock price - Beginning stock Price)/Initial Price}*100

= {($0.6 + $72 - $80)/$80} * 100 = -9.25%

b) Dividend Yield = (Dividend/Initial Price per share) * 100 = ($0.6/$80) * 100 = 0.75%

Capital gain yield = (Ending price - Beginning price)/Beginning price = {($72-$80)/$80}*100 = -10%

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