A stock was priced at $150 per share at the end of 2007. The following table sho

Question

A stock was priced at $150 per share at the end of 2007. The following table shows dividends per share paid during each year and the price of the stock at the end of the year for the following four years: 2008, 2009, 2010, 2011 and the Dividends Paid during year: $3, $3, $3.50, $4. Stock price at end of year: $125, $150, $155, $155. For each year from 2008 to 2011, calculate the dividend yield, the capital-gains yield, and the total return to the stock. Express your calculations in percentage terms.

Explanation / Answer

Dividend Yield for year 1 will be = DIV1/Po =3/150 where DIV1 is the dividend of the first year and Po is the price of the last year. Dividend yield for year 2 will be = DIV2/P1=3/125 and so on... Capital gains yield for year 1 will be = (P1-Po) / Po = (125-150)/150 Capital gains yield for year 2 will be = (P2-P1)/P1=(150-125)/125 and so on.. The total return on the stock for year 1 will be dividend yield for year 1 plus capital gains yield for eyar 1 and so on.. I hope this helps. Do rate me please. Require ratings :) Thank You

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