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. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b.

What was the dividend yield and the capital gains yield? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Question

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DeniceSandidge DeniceSandidge · Answer 1 · 2019-12-25T15:21:09+01:00

Answer:

total return = -8.54 %

dividend yield = 2.23 %

capital gains yield = -10.77 %

Explanation:

given data

initial price = $65 per share

paid a dividend = $1.45 per share

ending share price = $58

to find out

percentage total return and dividend yield and the capital gains yield

solution

first we calculate here total return that is express as

total return = close price - opening price + dividend ÷ opening price ...........1

put here value we get

total return = [tex]\frac{58+65-1.45}{65}[/tex]

total return = -8.54 %

and

now we get dividend yield as

dividend yield = [tex]\frac{dividend}{opening\ price}[/tex] .............2

put here value we get

dividend yield = [tex]\frac{1.45}{65}[/tex]

dividend yield = 2.23 %

and

now we get here capital gains yield that is express as

capital gains yield = closing price - opening price ÷ opening price ..........3

put here value we get

capital gains yield = [tex]\frac{58-65}{65}[/tex]

capital gains yield = -10.77 %