Firm A pays $0.80 a year as dividends on its common stock. Currently this stock sells for $28.12 a share. Last year, at this time, the stock was selling for $31.64 a share. ◦ What is the total return on this stock in dollars?  Dollar return = income + capital gain ◦ What is the percentage total return?  Percentage total return = dollar return / beg. price  Percentage total return = dividend yield +capital gains yield  Capital gains yield = (end. price − beg. price)/beg. Price  Dividend yield = income/beg. Price

Respuesta :

Answer:

1) Total return on this stock in dollars = (Ending price - Beginning price + Dividend)

Total return = (28.12 - 31.64 + 0.80)

Total return = -2.72

2) Percentage total return = (Ending price - Beginning price + Dividend)/beg price = (28.12 - 31.64 + 0.8) / 31.64

= -2.72 / 31.64

= -0.085967

= -8.60%