Question

Suppose a stock had an initial price of $87 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $102. 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 total percentage return on the share investment is 19.08% as calculated below as sum of the dividends yield and capital gains yield

The dividend yield on the share is 1.84%

The capital gains yield on the share is 17.24%

Find the details of the figures in the explanation section below.

Explanation:

The percentage total return on the share is given the total return/initial share price.

The total return is the addition of dividend yield and gains yield

dividend yield=dividend/share price

=1.60/87

=1.84%

capital gains yield =(102-87)/87

=17.24%

Total percentage return=1.84%+17.24%

=19.08%