Question
A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells
A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $56. a. What is the total rate of return on the stock? (Enter your answer as a whole percent.) Rate of return _________% b. What are the dividend yield and percentage capital gain? (Enter your answers as a whole percent.) Dividend yield_________ % Capital gains yield _________ % c. Now suppose the year-end stock price after the dividend is paid is $48. 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.) Dividend yield ________ % Capital gains yield _________% d. Is there any change in the dividend yield calculated in parts (b) and (c)? The dividend yield is _____; it is based on the_______ .
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