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Suppose a stock had an initial price of $60 per share, paid a dividend of...

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Finance

Suppose a stock had an initial price of $60 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $53. Compute the total percentage return, the dividend yield, and the capital gains yield. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Total return -10.67selected answer correct %
Dividend yield 1.00selected answer correct %
Capital gains yield -11.67selected answer correct %

Explanation Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.

Using the equation for total return, we find:

R = [($53 60) + .60]/$60

R = .1067, or 10.67%

And the dividend yield and capital gains yield are:

Dividend yield = $.60/$60

Dividend yield = .0100, or 1.00%

Capital gains yield = ($53 60)/$60

Capital gains yield = .1167, or 11.67%

Heres a question for you: Can the dividend yield ever be negative? No, that would mean you were paying the company for the privilege of owning the stock. It has happened on bonds.

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