1. Suppose a stock begins the year with a price of $25 per share and ends with a price of $35 per share. During the year it paid a $2 dividend per share. What are its dividend yield, its capital gain, and its total return for the year? We can imagine the cash flows in Figure 9.3.

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FIGURE 9.3 Cash Flow-An Investment Example $37 TOTAL Cash inflows $2 Dividends (Div) $35 Ending price per Time 10 Cash outflows -$25 (Po) share (P1)