Suppose a stock had an initial price of $105 per share, paid a dividend of $2.50

Question

Suppose a stock had an initial price of $105 per share, paid a dividend of $2.50 per share during the year, and had an ending share price of $129. Requirement 1: 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).) Percentage total return % Requirement 2: 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).) Dividend yield % Requirement 3: 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).) Capital gains yield

Explanation / Answer

1)

Percentage total return = (ending share price -  initial price + dividend )/ initial price

Percentage total return = (129-105+2.5)/105

Percentage total return = 25.24%

2)

Dividend yield = dividend / initial price

Dividend yield = 2.5/105

Dividend yield = 2.38%

3)

Capital gains yield =  (ending share price -  initial price) / initial price

Capital gains yield = (129-105)/105

Capital gains yield = 22.86%

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