Suppose a stock had an initial price of $65 per share, paid a dividend of $1.45 per share during the year, and had an en...

Question

Question

Suppose a stock had an initial price of $65 per share, paid a dividend of $1.45 per share during the year, and had an ending share price of $58.

A. Compute the percentage total return.

B. What was the dividend yield and the capital gains yield

Answer 1

Answer #1

a)

Total Return = (Final Price - Initial Price + Dividend)/Initial Price

Total Return = ($58 - $65 + $1.45)/$65 = -8.54%

b) Capital Gains Yield = (Final Price - Initial Price)/Initial Price

Capital gains yield = (58 - 65)/65 = -10.77%

Dividend Yield = Dividend/Initial Price

Dividend yield = $1.45/$65 = 2.23%

Answer 2

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