Problem 10-1 Calculating Returns [LO 1] Suppose a stock had an initial price of
ID: 2624352 • Letter: P
Question
Problem 10-1 Calculating Returns [LO 1]
Suppose a stock had an initial price of $111 per share, paid a dividend of $2.80 per share during the year, and had an ending share price of $138.
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).)
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).)
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).)
Suppose a stock had an initial price of $111 per share, paid a dividend of $2.80 per share during the year, and had an ending share price of $138.
Explanation / Answer
The percentage total return = [Dividend + (Change in Price)]/initial Price * 100
= [2.80 + (138-111)]/111 * 100
= 29.8/111 * 100
= 26.85%
Dividend Yield = Dividend/Initial Price * 100
= 2.8/111 * 100
= 2.52%
Capital Gains Yield = (138-111)/111 * 100
= 24.32%
The percentage total return = [Dividend + (Change in Price)]/initial Price * 100
= [2.80 + (138-111)]/111 * 100
= 29.8/111 * 100
= 26.85%
Dividend Yield = Dividend/Initial Price * 100
= 2.8/111 * 100
= 2.52%
Capital Gains Yield = (138-111)/111 * 100
= 24.32%
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