Question

suppose a stock had an initial price of $115 per share, paid a dividend of $3.00 per share during the year, and had an ending share price of $144. a. compute the percentage total return. (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? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. what was the capital gains yield? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

The percentage total return is 28.7%, the dividend yield is 2.61%, and the capital gains yield is 26.09%.

Step-by-step explanation:

To compute the percentage total return, we need to calculate the percentage change in the stock price. The formula for total return percentage is ((Ending Price - Initial Price) + Dividends) / Initial Price multiplied by 100. In this case, the initial price is $115, ending price is $144, and dividend is $3. Plugging these values into the formula, we get ((144 - 115 + 3) / 115) * 100 = 28.7%. Therefore, the percentage total return is 28.7%.

The dividend yield can be calculated by dividing the dividend by the initial price and multiplying by 100. In this case, the dividend is $3 and the initial price is $115. So, the dividend yield is (3 / 115) * 100 = 2.61%.

The capital gains yield can be calculated by subtracting the dividend from the percentage total return. In this case, the percentage total return is 28.7% and the dividend yield is 2.61%. So, the capital gains yield is 28.7% - 2.61% = 26.09%.