Question

Suppose a stock had an initial price of $117 per share, paid a dividend of $3.10 per share during the year, and had an ending share price of $147.
a. Compute the percentage total return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What was the dividend yield?

Answer 1

Answer:

The correct answer for option (a) is 28.29% and for option (B) is 2.65%.

Explanation:

According to the scenario, the given data are as follows:

Initial price = $117

Ending price = $147

Dividend = $3.10

(a) We can calculate the Total return percentage by using following formula:

Total return percentage = ( Ending Price - Initial Price + Dividend) ÷ Initial Price

By putting the value, we get

Total return percentage = ( $147 - $117 + $3.10) ÷ ( $117)

= 28.29% (approx).

(b). we can calculate the dividend yield by using following formula:

Dividend Yield = Dividend ÷ Initial Price

By putting the value, we get

Dividend Yield = $3.10 ÷ $117

= 2.65%