Question

Tamara June purchased 140 shares of All-Canadian Manufacturing Company Stock at $32.50 a share. One year later, she sold the stocks for $43 a share. She paid her broker a $32 commission when she purchased the stocks and a $46 commission when she sold them. During the 12 months she owned the stocks, she received $200 in dividends.

a. Calculate Tamara’s annual shareholder return. (Round your intermediate calculations to 3 decimal places and final answer to 1 decimal place. Omit the "%" sign in your response.) Annual shareholder return % ?

b. Break this total return into its components: dividend yield and capital gains yield. (Enter answers in decimals, not in percent. Round "Dividend yield" to 3 decimal places and "Capital gains yield" to 2 decimal places.) Dividend yield and Capital gains yield?

Answer 1

Ans A ) Annual share holder return will be find as below

Purcahse price = stock price * number of stock + commision

= 140 * 32.5 + 32

= 4582

Selling price = stock price * number of stock - commission

= 140* 43 -46

= 5974

Annual share holder return = (selling price + dividend - purchase price)/(purchase price * number of share)

= (5974 + 200 - 4582)/(32.5*140)

= 34.989%

Ans b) Dividend yield = dividend/4550

= 200/4550

= 4.396%

Capital gain yield = Annual return - dividend yield

= 30.593%