Question

Suppose a stock had an initial price of $85 per share, paid a dividend of $1.50 per share during the year, and had an ending share price of $99. 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

Answer 1

18.23%

1.76%

Step-by-step explanation:

The total return of a stock = price return + dividend yield

Price return calculates the change in price of a stock

Price return = (change in price / initial stock price ) x 100

change in price = $99 - $85 = $14

($14 / $85) x 100 = 16.47%

Dividend yield = (dividend paid / initial price of the stock ) x 100

($1.5 / $85) x 100 = 1.76%

Total return = 16.47% + 1.76% = 18.23%