If the price of Microsoft stock is $36 today, and the dividend next period is $2.50...

Question

Question

If the price of Microsoft stock is $36 today, and the dividend next period is $2.50 and the price next period is expected to be $54, what is the:

a) Dividend Yield

b) Price Appreciation

c) Total Return

Answer 1

Answer #1

a

Dividend yield = dividend/price = 2.5/36 = 6.94%

b

rate of return/HPR = ((Ending price+Dividend)/Beginning price-1)

=((54+0)/36-1)

=50%

c

rate of return/HPR = ((Ending price+Dividend)/Beginning price-1)

=((54+2.5)/36-1)

=56.94%

Answer 2

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