Yesterday Dayne sold the 250 shares of the Johnson & Johnson (J&J;) stock that h

Question

Yesterday Dayne sold the 250 shares of the Johnson & Johnson (J&J;) stock that he owned for $61 per share. When he purchased the stock two years ago, Dayne paid $59.50 per share. Every three months during the time that he held the stock, Dayne received a quarterly dividend equal to $0.50 (a) What return (yield) did Dayne earn during the two years that he held J&J;? (b) If the price of the stock was $63 per share one year ago, what return did Dayne earn in each year he held the stock?

Explanation / Answer

a) yield is 1.5 + 0.5 * 8 = 5.5. => 5.5 * 100/ 59.5 = 9.24%

b)

1st year 3.5 + 0.5 * 4 = 5.5 => 5.5 * 100/ 59.5 = 9.24%

2nd year 0%

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