Question
A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $2 per share and sells
A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $2 per share and sells for $46.
a.What is the total rate of return on the stock?(Enter your answer as a whole percent.)
b.What are the dividend yield and percentage capital gain?(Enter your answers as a whole percent.)
c.Now suppose the year-end stock price after the dividend is paid is $34. What are the dividend yield and percentage capital gain in this case?(Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.)
d.Is there any change in the dividend yield calculated in parts (b) and (c)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started