Question
Suppose you buy the common stock of ZYX, Inc. at $50 a share today. Assume that the company will pay $0.50 dividend next year (i.e.,
Suppose you buy the common stock of ZYX, Inc. at $50 a share today. Assume that the company will pay $0.50 dividend next year (i.e., one year from now). Which is incorrect? Ignore transaction costs.
A.
The stocks dividend yield would be 1%.
B.
If you sell the stock at $55 one year later, your capital gains yield would be 5%.
C.
If you sell the stock at $55 one year later, your total investment return for the period would be 11%.
D.
If you recieve the $0.50 dividend and sell the stock for $55 next year, your total dollar return would be $5.50 per share.
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