Suppose you bought 1,150 shares of stock at an initial price of $56 per share. T

Question

Suppose you bought 1,150 shares of stock at an initial price of $56 per share. The stock paid a dividend of $0.66 per share during the following year, and the share price at the end of the year was $51.

a. Compute your total dollar return on this investment. (A negative value should be indicated by a minus sign.)

b. What is the capital gains yield? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. What is the dividend yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

d. What is the total rate of return on the investment? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Explanation / Answer

a') Total Dollar Return = Share price at the end + Dividend Received - Share Price at the beginning Total Dollar Return = ($51 + $0.66 - $56) x 1,150 shares -$4,991.00 b) Capital Gain Yield = (Price at the end - Price at the beginning)/ Price at beginning Capital Gain Yield = ($51 - $56)/$56 -8.93% c) Dividend yield = Dividend/ Price at the beginning Dividend yield = $0.66/ $56 1.18% d) Total Rate of Return = (Price at the end - Price at the beginning)+ Dividend )/ Price at beginning Total Return = (($51 - $56)+ $.66)/$56 -7.75%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

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