Suppose a stock had an initial price of $96 per share, paid a dividend of $2.70

Question

Suppose a stock had an initial price of $96 per share, paid a dividend of $2.70 per share during the year, and had an ending share price of $77.50. Requirement 1: 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).) 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? (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).) Capital gains yield %

Explanation / Answer

1./

TOATL RETURN %

= [DIVIDEND + (ENDING PRICE - INITIAL PRICE)] / INITIAL PRICE

= [$2.70 + ($77.50 - $96)] / $96

= ($2.70 - $18.50) / $96

= -$15.80 / $96

= -16.46%

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2./

DIVIDEND YEILD

= DIVIDEND PAID / CURRENT SHARE PRICE

= $2.70 / $77.50

= 3.48%

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3./

CAPITAL GAIN YEILD

= (ENDING SAHRE PRICE - INITIAL PRICE) / INITIAL PRICE

= ($77.50 - $96) / $96

= -$18.5 / $96

= -19.27%

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