Question

The capital gain yield of an equity security is 9.27 percent. The security paid a quarterly...

The capital gain yield of an equity security is 9.27 percent. The security paid a quarterly dividend of $0.55 per share during the year. What is the current price of the security if the total return is 13.76 percent?

A. $12.25

B. $13.38

C. $49.00

D. $53.54

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Answer #1

Assuming the capital gain yield and total return Percentages are for the period of quarter

Quarterly dividend = $0.55

Dividend Yield = Total Return - Capital Gain yield

= 13.76% - 9.27% = 4.49%

Dividend yield = Dividend / Current price

Current price = $0.55 / $0.0449

Current Price = $12.25

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