Question

One year ago, you purchased a stock at a price of $56.87 per share. Today, you sold your stock at a loss of 18.07 percent. Your capital loss was $12.10 per share. What was the dividend yield on this stock

Answer 1

The dividend yield on the stock was calculated at 3.22% by determining the difference between the selling price calculated from the given loss percentage and the actual selling price derived from the capital loss, and then dividing that dividend per share by the original purchase price per share.

Step-by-step explanation:

To calculate the dividend yield on the stock, we first need to determine the price at which the stock was sold. Since the stock was sold at a loss of 18.07%, and the loss per share was $12.10, we can set up the following equation:

Original Price - (Original Price x 18.07%) = Selling Price
56.87 - (56.87 x 0.1807) = Selling Price

Now we can compute the selling price:

56.87 - 10.27 = 46.60

Given that the capital loss was $12.10 per share, this means the stock sold for $56.87 - $12.10 = $44.77 per share. This discrepancy implies that the dividend paid out was the difference between the selling price calculated from the loss percentage and the selling price derived from the given capital loss, which would be $46.60 - $44.77 = $1.83 per share.

Finally, the dividend yield percentage is given by (Dividend per Share / Purchase Price per Share) * 100:

(1.83 / 56.87) * 100 = 3.22%

Therefore, the dividend yield on the stock was 3.22%.