Please help me with this question on Stock Returns. Thank you for your expertise
ID: 2780090 • Letter: P
Question
Please help me with this question on Stock Returns.
Thank you for your expertise.
1. Stock returns Aa Aa Some stock-return data has been gathered below for Shank & Co. Time PriceDividend 35.75 7?? 1.70 1.85 1 38.74 44.61 3 43.52 The price at time periad 2 is the price of a share of Shank & Co. at the end of the second year, while the price at the beginning of the second year is $38.74. The dividend at time period 2 is the dividend Shank paid at the end of the second year. Shank also paid a dividend at the end of the first year, but it is not given in the table. The dividend yield over the first year was 2.90%. what dividend did Shank pay at the end of the first year? O $1.39 O $1.04 $1.25 O $1.18 O $1.61 What was the total percentage return on Shank's stock during the second year? 21.29% 20.91% 20.79% 19.54% 20.54% What was the capital gains yield on Shank's stock during the third year? 0-244% -1.73% -2.31% -2.49% -1.86% What was the total percentage return on Shank's stock during the third year? 2.42% 1.71% 1.66% 2.11% 2.47%Explanation / Answer
Time Frame (Please refer while going through Answer)
Time
Price
P0
0
35.75
P1
1
38.74
P2
2
44.61
P3
3
43.52
Time Frame (Please refer while going through Answer)
Time
Dividend
P0
0
Dividend paid during 1st Year
1
???
Dividend paid during 2nd Year
2
1.7
Dividend paid during 3rd Year
3
1.85
Dividend Yield = D1 / P0
2.90% = D1 / 35.75
P0 & Dividend Yield is given in question
D1 = 35.75 *2.9%
D1 = 1.04
Total Percentage Return during 2nd Year =
( (Dividend Paid During the year) + (Change in value of the share during 2nd year i.e. (P2-P1))) / (Price at the beginning of 2nd Year i.e. P1)
(( 1.70 ) + (44.61-38.74)) / (38.74)
((1.70) + (5.87)) / (38.74)
(3) Capital Gain Yield during 3rd Year =
(Price at the end of 3rd Year – Price at the beginning of 3rd Year) i.e. (P3-P2) / (Price at the beginning of 3rd Year i.e. P2)
= (43.52 – 44.61)/ (44.61)
= - 1.09/ 44.61
= - 2.44%
Total Percentage Return during 3rd Year =
( (Dividend Paid During the year) + (Change in value of the share during 3rd year i.e. (P3-P2))) / (Price at the beginning of 3rd Year i.e. P2)
= ((1.85) + (43.52-44.61))/ (44.61)
= ((1.85) + (-1.09)) / (44.61)
= .76 / 44.61
= 1.71%
Hope it satisfies the Query.
Thanks
Time Frame (Please refer while going through Answer)
Time
Price
P0
0
35.75
P1
1
38.74
P2
2
44.61
P3
3
43.52
Time Frame (Please refer while going through Answer)
Time
Dividend
P0
0
Dividend paid during 1st Year
1
???
Dividend paid during 2nd Year
2
1.7
Dividend paid during 3rd Year
3
1.85
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