Question

Two years ago, you purchased 100 shares of General Mills Corporation. Your purchase price was 52 a share, plus a total commission of8 to purchase the stock. During the last two years, you have received the following dividend amounts: 1.96 per share for the first year and2.02 per share the second year. Also, assume that at the end of two years, you sold your General Mills stock for 60 a share minus a total commission of12 to sell the stock. Calculate the dividend yield for your General Mills stock at the time you purchased it. Note: Enter your answer as a percent rounded to 2 decimal places.

Answer 1

The dividend yield for General Mills stock at the time of purchase is 3.77%, calculated by dividing the first year's dividend per share by the stock's purchase price per share and then converting to a percentage.

Step-by-step explanation:

To calculate the dividend yield for General Mills stock at the time of purchase, we need to consider the total dividends paid and the price per share at the time of purchase.

The total dividends received for the first year per share were $1.96, and for the second year, $2.02, but the question only asks for the yield at the initial purchase. The dividend yield can be found by taking the annual dividend per share and dividing it by the stock's purchase price per share.

The first year's dividend yield is calculated by dividing the first year's dividend ($1.96) by the purchase price ($52), yielding an annual dividend yield at the time of purchase of 3.77%.

Here is the calculation:

Dividend Yield = (Annual dividends per share / Purchase price per share) * 100

Dividend Yield = ($1.96 / $52) * 100

Dividend Yield = 3.77%