Question

One year ago, Marcus purchased 400 shares of Maverick Data stock for $21,052. Today, he sold those shares for $56.00 per share. What is the total return on this investment if the dividend yield is 1.9 percent? A) 9.10 percent B) 8.30 percent C) 6.56 percent D) 5.39 percent E) 7.61 percent.

Answer 1

Total Return = Capital gains yield + Dividend Yield

Dividend Yield = 1.9%

Capital Gains Yield = (Sale Price- Buy Price)/Buy price

Per share buy price = $21,052/400 = $52.63

Capital Gains Yield = ($56 - $52.63)/$52.63

Capital gains Yield = $3.37/$52.63 = 6.40%

Total Yield = 1.9% + 6.40% = 8.30%