Question

Suppose a stock had an initial price of $96 per share, paid a dividend of $2.70 per share during the year, and had an ending share price of $77.50. Requirement:a. Compute the percentage total return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage total return % b. What was the dividend yield? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Dividend yield % c. What was the capital gains yield? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Capital gains yield %

Answer 1

Answer: See explanation

Explanation:

Sales price = $77.50

Add: Dividend = $2.70

Less: Purchase price = $96

Dollar return = -$15.80

a. Compute the percentage total return.

= Dollar return / Purchase price

= -15.80 / 96

= -0.1646

= -16.46%

b. What was the dividend yield?

= Dividend / Purchase price

= 2.70 / 96

= 0.0281

= 2.81%

c. What was the capital gains yield?

= -16.46% - 2.81%

= -19.27%