Question

cents, and is now priced at $58 per share. I DUppose you bought 1,000 shares of the common bought 1,000 shares of the common stock of ABC Corporation one year ago at an initial year ago at an initial price of $57 per share. The stock Just paid a cash dividend of 15 cents, and is now price What was your "dividend yield"? A. Less than 1.00%. B. 1.0% to 1.5%. C. 1.5% to 2.0%. D. 2.0% to 3.0%. E. More than 3.0%. 2) What was your "capital gains yield” for ABC Corporation's stock? A. Less than 1.00%. B. 1.0% to 1.5%. C. 1.5% to 2.0%. D. 2.0% to 3.0%. E. More than 3.0%. 3) What was your total return for ABC Corporation's stock? A. Less than 1.00%. B. 1.0% to 1.5%. C. 1.5% to 2.0%. D. 2.0% to 3.0%. E. More than 3.0%.

Answer 1

1: B

dividend yield= annual dividend/initial price

= 0.75/57 = 1.32%

2: C

Capital gains yield = (P1-P0)/P0

= (58-57)/57 = 1.75%

3: E

Total return= dividend yield+ capital gains yield

= 1.32%+1.75%

= 3.07%