Some stock-return data has been gathered below for Shank & Co. Time Price Divide

Question

Some stock-return data has been gathered below for Shank & Co.

Time          Price          Dividend
0                35.75              -
1                38.46             ???
2                44.61             1.7
3                43.66             1.85

The price at time period 2 is the price of a share of a Shank & Co. at the end of the second year, while the price at the beginning of the second year is $38.46. The dividend at time period 2 is the dividend Shank paid at the end of the second year. Shank also paid a dividend at the end of the first year, but it is not given in the table. The dividend yield over the first year was 3.6%. What dividend did Shank pay at the end of the first year?

$1.57
$1.36
$1.43
$1.32
$1.29

What was the total percentage return on Shank's stock during the second year?

21.8%
20.41%
19.79%
19.91%
19.66%

What was the capital gains yield on Shank's during the third year?

-2.13%
-1.68%
-2.4%
-2.22%
-2.31%

What was the total percentage return on Shank's stock during the third year?

1.89%
1.71%
2.02%
2.51%
2.11%

Explanation / Answer

Dividend = Yield * stock price

   = 3.6% * 35.75 = 1.29 (Option E)

% return = (end price + dividend - start price) / start price

= (44.61 + 1.7 - 38.46 ) / 38.46 = 20.41% (Option B)

Capital gains yield = (end price - start price) / start price

= (43.66 - 44.61) / 44.61 = -2.13% (Option A)

% return = (end price + dividend - start price) / start price

= (43.66 +1.85 - 44.61) / 44.61 = 2.02% (Option C)

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