e Calculating Returns Rework P mohammed.23 c secure https://www.chegg.com/homewo
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e Calculating Returns Rework P mohammed.23 c secure https://www.chegg.com/homework help Fundamentals of vestments 7th edition-chapter 1 problem-3QP solution 9780077861636 a -m Apps -YouNo Live Strea...-Register D out eJUIly/sui- Chegg Study TEKTBOOK SOLUTIONS EXPERT OA Search Chapter 1, Problem 3QP 0 Boonerx Show all steps: ( Post a question Answers from our experts for your tough Problem Enter question Calculating Returns Rework Problems 1 and 2 assuming that you buy 500 shares of the stock and the ending share price is $34. Problem 1 Calculating Returns Suppose you bought 100 shares of stock at an initial price of $37 per share. The stock paid a dividend of $0.28 per share during the following year, and the share price at the end of the year was $41. Compute your total dollar return on this investment Does your answer change it you keep the stock instead of selling t? Why or why not? Problem 2 Calculating Yields In the previous problem, what is the capital gains yield? The dividend yield? What is the total rate of returm on the investment? CONTINUE TO POST 15 questions remaiing My Textbook Solutions Real Estate Step-by-step solution s of." Principlcs 7th Edition Gth Edition 10th Edition ew all selutions There is no solution to this problem yet Get help from a Chegg subject expert. Chegg tutors who can help right now ASK AN EXPERT osh Ph.D. in Mathem...&58 Hannah Kent State Univer420 Soujanya Osmania Universi...429 FIND ME A TUTORExplanation / Answer
From the problem -
Bought shares 500 @ $37 --> total cost 500*37 = $18,500
Dividend paid per share $0.28 --> total dividend 500* 0.28 = $140
Ending price per share $34 --> Total sale value (if sold) = $17,000
Total dollar return per stock if I sell the stocks
= (Dividends + capital gain / loss)/ number of shares = (140 + (17,000- 18,500))/500 --> $ - 2.72 (loss per share)
Total dollar return per stock if I hold the stock
= dividends / number of shares = 140 / 500 = $0.28 / share (dividend per share)
The share is trading below its buy price and hence, selling it would lead to incurrence of losses. If you continue to hold the stock you only have losses in the books which is unrealised. Hence, your dollar real returns amount to the dividends recieved during the period under consideration.
2. calculation of yield -
a) capital gains yield - there are no capital gains yeild due to the fact that the original buy price ($37) is lower than the sale price ($34) - $3 / share is the capital loss per share.
b) dividend yield = dividend for the period / share price = 0.28 / 34 = 0.8235% (as on the date of valuation, this is the dividend yield per share
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