Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. suppose a stock had an initial price of $60 per sh

Suppose a stock had an initial price of $60 per share, paid a dividend of...

80.2K

Verified Solution

Question

Finance

Suppose a stock had an initial price of $60 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $53. Compute the total percentage return, 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 answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Total return -10.67selected answer correct %
Dividend yield 1.00selected answer correct %
Capital gains yield -11.67selected answer correct %

Explanation Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.

Using the equation for total return, we find:

R = [($53 60) + .60]/$60

R = .1067, or 10.67%

And the dividend yield and capital gains yield are:

Dividend yield = $.60/$60

Dividend yield = .0100, or 1.00%

Capital gains yield = ($53 60)/$60

Capital gains yield = .1167, or 11.67%

Heres a question for you: Can the dividend yield ever be negative? No, that would mean you were paying the company for the privilege of owning the stock. It has happened on bonds.

Answer & Explanation Solved by verified expert
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

Other questions asked by students