A stock is selling today for $50 per share. At the end of the year, it...

70.2K

Verified Solution

Question

Finance

A stock is selling today for $50 per share. At the end of theyear, it pays a dividend of $3 per share and sells for $58.
a. What is the total rate of return on thestock? (Enter your answer as a whole percent.)
b. What are the dividend yield and percentagecapital gain? (Enter your answers as a wholepercent.)
c. Now suppose the year-end stock price afterthe dividend is paid is $42. What are the dividend yield andpercentage capital gain in this case? (Negative amountsshould be indicated by a minus sign. Enter your answers as a wholepercent.)
d. Is there any change in the dividend yieldcalculated in parts (b) and (c)?

Answer & Explanation Solved by verified expert

3.7 Ratings (570 Votes)

a Total return on stock P1 P0 DP0 P0 Initial stock price 50 P1 Ending stock price 58 D Dividends 3 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

A stock is selling today for $50 per share. At the end of theyear, it pays a dividend of $3 per share and sells for $58.a. What is the total rate of return on thestock? (Enter your answer as a whole percent.)b. What are the dividend yield and percentagecapital gain? (Enter your answers as a wholepercent.)c. Now suppose the year-end stock price afterthe dividend is paid is $42. What are the dividend yield andpercentage capital gain in this case? (Negative amountsshould be indicated by a minus sign. Enter your answers as a wholepercent.)d. Is there any change in the dividend yieldcalculated in parts (b) and (c)?