Suppose a stock had an initial price of $64 per share, paid a dividend of $1.40

Question

Suppose a stock had an initial price of $64 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $57. Compute the percentage total return (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What was the dividend yield and the capital gains yield? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Percentage total return = ($57 + $1.40 - $64)/$64 = -8.75%

Dividend Yield = Annual Dividend / Current Market price
= $1.40/$57 = 2.46%

Capital Gains Yield = (Ending Stock Price – Initial stock Price) / Initial Stock Price
= ($57 - $64)/$64 = -10.94%

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