Two years ago, you purchased 100 shares of Coca-Cola Company. Your purchase pric

Question

Two years ago, you purchased 100 shares of Coca-Cola Company. Your purchase price was $58 a share, plus a total commission of $30 to purchase the stock. During the last two years, you have received the following dividend amounts: $1.65 per share for the first year and $1.77 per share the second year. Also, assume that at the end of two years, you sold your Coca-Cola stock for $67 a share minus a total commission of $40 to sell the stock (a) Calculate the dividend yield for your Coca Cola stock at the time you purchased it. (Enter your answer as a percent rounded to decimal places.) Dividend yield at purchase b) Calculate the dividend yield for your Coca-Cola stock at the time you sold it. (Enter your answer as a percent rounded to 2 decimal places.) Dividend yield at sale Calculate the total return for your Coca-Cola investment when you sold the stock at the end of two years. (Do not round termediate calculations. Round your final answer to the nearest whole number.) otal return Calculate the annualized holding period yield for your Coca-Cola investment at the end of the two-year period. (Do not round

Explanation / Answer

Coca Cola Company a. Calculate the current yield for your Coca Cola stock at the time you purchased it. $1.65 first year dividend ÷ $58 original purchase price = 2.84 percent b. Calculate the current yield for your Coca-Cola stock at the time you sold it. $1.77 second year dividend ÷ $67 selling price = 2.64 percent c. Calculate the total return for your Coca-Cola investment when you sold the stock at the end of two years. Current Return = $1.65 + $1.77 = $3.42 x 100 shares = $342 Capital Gain = $67 selling price - $58 original purchase price = $9 x 100 shares = $900 Capital Gain = $900 - $70 commission = $830 Total Return = $342 Current Return + $830 Capital Gain = $1,172 d. Calculate the annualized holding period yield for your Coca-Cola investment at the end of the two-year period. Annualized Holding Period Yield = $1,172 Total Return ÷ $5,830 original investment x 1/2 = 0.100515 = 10.05 percent

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.