Question

Suppose a stock had an initial price of $82 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $74. Compute the percentage total return, dividend yield, and 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.)

Answer 1

The percentage total return, dividend yield, and capital gains yield is - 8.29% , 1.46 % and - 9.75% respectively

Step-by-step explanation:

The computations are shown below:

1. For total return:

= {(Ending share price - initial price) + Dividend} ÷ (Initial price) × 100

= {($74 - $82) + $1.20} ÷ ($82) × 100

= - $6.80 ÷ $82 × 100

= - 8.29%

2. Dividend yield

= (Dividend) ÷ (Initial price) × 100

= $1.20 ÷ $82 × 100

= 1.46%

3. For capital gain yield:

= (Ending share price - initial price) ÷ (Initial price) × 100

= ($74 - $82) ÷ ($82) × 100

= - $8 ÷ $82 × 100

= - 9.75%