Question

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

2. Answer the following question

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

Homework Answers

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

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