Question

2. Answer the following question

i. You purchased 500 shares of stock on January 1^st 2018 for $85 per share. The stock pays an annual dividend of $12 per share. On Dec. 31^st 2018, the share is $95 per share. What is your dividend Yield, Capital gains Yield and Total Yield in same order?

A) 14.12%, 11.76%, 25.88%

B) 12.63%, 10.53%, 23.16%

C) 23.16%,10.53%, 12.63%

D)28.88%, 12%, 16.88%

E) 11.76%, 10.53%, 22.29%

ii. You purchased 500 shares of stock on January 1^st 2018 for $85 per share. The stock pays an annual dividend of $12 per share. On Dec. 31^st 2018, the share is $95 per share.

What is your total dollar return, total dollar dividend and total capital gains in dollar in the same order given?

A) $12, $10, $22

B) $85,$95, $12

C) $11000, $6000, $5000

D) $5000, $6000,$11000

E) $8500,$7000,$15,500

Answer 1

1.Dividend yield=Dividend/Beginning value

=(12/85)

=14.12%

Capital gains yield=(End value-Beginning value)/Beginning value

=(95-85)/85

=11.76%

Total yield=Dividend yield+Capital gains yield

=14.12+11.76

=25.88%

Hence the correct option is:

A) 14.12%, 11.76%, 25.88%

b.Total dollar return=(End value-Beginning value+Dividend)*500 shares

=(95-85+12)*500 shares

=$11000

Total dividend=(12*500 shares)

=$6000

Capital gains=(End value-Beginning value)*500 shares

=(95-85)*500

=$5000

Hence the correct option is:

C) $11000, $6000, $5000