Question

Suppose a stock had an initial price of $87 per share, paid a dividend of $2.15 per share during the year, and had an ending share price of $98. a) Compute the percentage total return b) What was the dividend yield? c) What was the capital gains yield? |

Answer #1

Given :

Current Price (Po) = $87

Dividend received during the year (D) = $2.15

Year end Price (P1) = $98

**a) Calculation of Percentage total return**

Percentage total return = (D + P1 - Po) / Po *100

Percentage total return = ($2.15 + $98 - $87)/ $87 *100 = 13.15 / 87 *100 = 15.1149 %

**Percentage total return = 15.11 %**

**b) Calculation of Dividend Yield**

Dividend Yield = D / Po *100

Dividend Yield = $2.15 / $87 *100 = 2.4713%

**Dividend yield = 2.47%**

**c) Calculation of Capital gain yield**

Capital gain yield = (P1 - Po) / Po *100

Capital gain yield = ($98-$87) / $87 *100 = 12.6437%

**Capital gain yield = 12.64%**

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