Question

# 2. Answer the following question i. You purchased 500 shares of stock on January 1st 2018...

i. You purchased 500 shares of stock on January 1st 2018 for \$85 per share. The stock pays an annual dividend of \$12 per share. On Dec. 31st 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 1st 2018 for \$85 per share. The stock pays an annual dividend of \$12 per share. On Dec. 31st 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

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

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