Suppose a stock had an initial price of $93 per share, paid a dividend of $2.40

Question

Suppose a stock had an initial price of $93 per share, paid a dividend of $2.40 per share during the year, and had an ending share price of $76.00.

Compute the percentage total return. (Negative amount should be indicated by a minus sign. 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? (Negative amount should be indicated by a minus sign. 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 $93 per share, paid a dividend of $2.40 per share during the year, and had an ending share price of $76.00.

Explanation / Answer

Initial price of the stock =$93.

Dividend paid during the year =$2.40

Ending share price =$76.

Total return=Dividend received during the year+/- Increase/Decrease in the share price.

Decrease in share price =$93 -$76 =$17.

% of total return = ($2.40-$17)/$93

=-($14.6/$93)*100

=-15.6989% rounded to 15.70%.

Answer for requirement 2:

Dividend yield% =Dividend/Current share price.

Assuming that end of the year share price as the current share price.

Substituting the values in the formula =($2.40/$76)*100 = 3.15789% rounded to 3.16%

Answer for requirement 3:

Capital gains yield formula = Current price-Original price/Original price.

=[($76 -$93)/$93]*100

=(-17/$93)*100

=-18.27956% rounded to -18.28%

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