Question

Assume that you purchased 220 shares of stock for $69 a share, that you received an annual dividend of $1.80 a share, and that you sold your stock for $100 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question)

Multiple Choice

• $7,216

• $22,396

• $396

• $15,576

• $31

A corporation's stock has a current market price of $88. The corporation has paid a dividend of $3.95 over the last 12 months. What is the dividend yield?

Multiple Choice

• 17.96 percent

• 8.98 percent

• 4.49 percent

• 3.49 percent

• 2.49 percent

Last year, a firm earned $3.20 per share. If the current market value for a share of stock is $47, what is the firm's PE ratio?

Multiple Choice

• 0.07

• 6.81

• 14.69

• 21.50

• It is impossible to calculate a PE ratio with this information.

ABC Clothing has after-tax income of $15.4 million. It also has 36 million shares of stock outstanding. What is the firm's earnings per share?

Multiple Choice

• $1.54 a share

• $3.60 a share

• $0.86 a share

• $0.43 a share

• $5.14 a share

Answer 1

Answer to Question 1:

Return per share = Selling Price per unit + Dividends per share - Purchase Price per share
Return per share = $100.00 + $1.80 - $69.00
Return per share = $32.80

Total Return = Return per share * Number of Shares
Total Return = $32.80 * 220
Total Return = $7,216

Answer to Question 2:

Dividend Yield = Annual Dividend / Current Price
Dividend Yield = $3.95 / $88.00
Dividend Yield = 4.49%

Answer to Question 3:

PE Ratio = Current Price per share / Earnings per share
PE Ratio = $47.00 / $3.20
PE Ratio = 14.69

Answer to Question 4:

Earnings per share = After-tax Income / Number of Shares
Earnings per share = $15,400,000 / 36,000,000
Earnings per share = $0.43