Question

Suppose a stock had an initial price of $56 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $66. What was the dividend yield and the capital gains yield?

Answer 1

Dividend yield= 2.85%

Capital gain yield= 17.85%

Step-by-step explanation:

A stock has an initial price of $56 per share

The dividend paid is $1.60 per share.

The ending share price is $66

The dividend yield can be calculated as follows

= $1.60/56

= 0.0285

= 2.85%

The capital gain yield can be calculated as follows

= $66-$56/$56

= $10/$56

= 0.1785

= 17.85%