Question

Suppose a stock had an initial price of $102 per share, paid a dividend of $3.30 per share during the year, and had an ending share price of $80.50.

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.)

Answer 1

To calculate the percentage total return, one needs to sum the dividend received and the change in stock price, divide by the initial price, and multiply by 100. In this case, the initial price was $102, the dividend was $3.30, and the ending price was $80.50, which gives a percentage total return of -17.84%.

Step-by-step explanation:

The student asked how to compute the percentage total return of a stock. This calculation includes two components: the dividend yield and the capital gain or loss from the change in stock price. To calculate this, one would carry out the following steps:

1. Identify the initial stock price, which is $102 per share.
2. Add the dividend received, which is $3.30 per share.
3. Identify the ending stock price, which is $80.50 per share.
4. Calculate the total dollar return, which is the sum of the dividend received plus the change in stock price. This is calculated as ending price ($80.50) plus dividend ($3.30) minus initial price ($102), resulting in a total return of -$18.20 per share.
5. Finally, to find the percentage total return, divide the total dollar return by the initial stock price and multiply by 100, resulting in a percentage total return of -17.84%.

Therefore, the answer is that the stock had a percentage total return of -17.84% for the year.