Consider a stock with a beginning of the year price of 21. The stock's dividends and quarterly stock price are as follows:
Quarter | Dividend | End of period stock price. | ||
1 | 1 | 23 | ||
2 | 2 | 22 | ||
3 | 1 | 22 | ||
4 | 1 | 22 |
The effective annual yield on this stock is ____________.
Quarter 1:
Rate of Return, r1 = (Ending Price + Dividend - Beginning Price)
/ Beginning Price
Rate of Return, r1 = ($23 + $1 - $21) / $21
Rate of Return, r1 = 0.1429
Quarter 2:
Rate of Return, r2 = (Ending Price + Dividend - Beginning Price)
/ Beginning Price
Rate of Return, r2 = ($22 + $2 - $23) / $23
Rate of Return, r2 = 0.0435
Quarter 3:
Rate of Return, r3 = (Ending Price + Dividend - Beginning Price)
/ Beginning Price
Rate of Return, r3 = ($22 + $1 - $22) / $22
Rate of Return, r3 = 0.0455
Quarter 4:
Rate of Return, r4 = (Ending Price + Dividend - Beginning Price)
/ Beginning Price
Rate of Return, r4 = ($22 + $1 - $22) / $22
Rate of Return, r4 = 0.0455
Effective Annual Yield = [(1 + r1) * (1 + r2) * (1 + r3) * (1 +
r4)] - 1
Effective Annual Yield = [(1 + 0.1429) * (1 + 0.0435) * (1 +
0.0455) * (1 + 0.0455)] - 1
Effective Annual Yield = 1.3036 - 1
Effective Annual Yield = 0.3036 or 30.36%
Consider a stock with a beginning of the year price of 21. The stock's dividends and quarterly stock price are as fo...
A stock's price is $20 at the beginning of a year. There is a 25 percent chance that the price will be $17 at the end of the year, and a 75 percent chance that the price will be $25 at the end of the year. The stock will pay a dividend of $3 during the year. The expected return on the stock is ____ percent. Please show work and solution.
1. XYZ stock price and dividends history are as follows: Year Beginning-of-year price Dividend paid at year- end $4 $4 $4 $4 2005 $100 $110 $90 $95 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008. Hint When the investor buys three shares at the beginning...
1. XYZ stock price and dividends history are as follows Year Beginning-of-year price Dividend paid at year- $100 $110 $90 $95 end $4 $4 $4 $4 2005 2006 2007 2008 An investor buys three shares of XYZ at the beginning of 2005, buys another two shares at the beginning of 2006, sells one share at the beginning of 2007, and sells all four remaining shares at the beginning of 2008. Hint: When the investor buys three shares at the beginning...
Ex 2) Based on the information about a firm's quarterly stock prices and dividends below, calculate annual holding period return for year 2018. Quarterly Stock Price and Dividend Data Date Price Dividend 1/2/18 33.88 4/2/18 30.67 0.17 7/2/18 29.49 10/1/18 32.38 12/31/18 39.07 0.17 0.17 0.17
Problem 6-34 Stock Valuation Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. a. Suppose a company currently pays an annual dividend of $2.50 on its common stock in a single annual installment, and management plans on raising this dividend by 4 percent per...
Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. a. Suppose a company currently pays an annual dividend of $6.00 on its common stock in a single annual installment, and management plans on raising this dividend by 5 percent per year indefinitely. If the...
Information about three securities appears next. Stock 1 Stock 2 Bond 1 Beginning-of- Year Price $43.20 $ 1.95 $1,090 End-of-Year Interest/Dividend Price Paid $47.45 $ 2.20 $ 2.09 $ 0 $1,118 $ 48.00 a. Assuming interest and dividends are paid annually, calculate the annual holding period return on each security. (Round your answers to 1 decimal place.) Annual Holding Period Return Stock 1 Stock 2 Bond 1
Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. a. Suppose a company currently pays an annual dividend of $3.60 on its common stock in a single annual installment and management plans on raising this dividend by 2 percent per year, indefinitely. If the...
At the beginning of the year, a stock's share price was $60. In March, it had a 3:5 reverse split and in June it paid $5 dividends. It closed the year with the share price of $45. What was the return for the stock for the year? -46.67% 33.33% -16.67% 38.89%
Problem 6-34 Stock Valuation Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. a. Suppose a company currently pays an annual dividend of $2.80 on its common stock in a single annual installment, and management plans on raising this dividend by 5 percent per...