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A stock is selling today for $50 per share. At the end of the year, it...

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Finance

A stock is selling today for $50 per share. At the end of theyear, it pays a dividend of $3 per share and sells for $58.

a. What is the total rate of return on thestock? (Enter your answer as a whole percent.)

b. What are the dividend yield and percentagecapital gain? (Enter your answers as a wholepercent.)

c. Now suppose the year-end stock price afterthe dividend is paid is $42. What are the dividend yield andpercentage capital gain in this case? (Negative amountsshould be indicated by a minus sign. Enter your answers as a wholepercent.)

d. Is there any change in the dividend yieldcalculated in parts (b) and (c)?

Answer & Explanation Solved by verified expert
3.7 Ratings (570 Votes)
a Total return on stock P1 P0 DP0 P0 Initial stock price 50 P1 Ending stock price 58 D Dividends 3    See Answer
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Transcribed Image Text

A stock is selling today for $50 per share. At the end of theyear, it pays a dividend of $3 per share and sells for $58.a. What is the total rate of return on thestock? (Enter your answer as a whole percent.)b. What are the dividend yield and percentagecapital gain? (Enter your answers as a wholepercent.)c. Now suppose the year-end stock price afterthe dividend is paid is $42. What are the dividend yield andpercentage capital gain in this case? (Negative amountsshould be indicated by a minus sign. Enter your answers as a wholepercent.)d. Is there any change in the dividend yieldcalculated in parts (b) and (c)?

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