Math Problem Statement
Suppose a stock had an initial price of $87 per share, paid a dividend of $1.80 per share during the year, and had an ending share price of $73.00.
Compute the percentage total return.
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
What was the dividend yield?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
What was the capital gains yield?
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Solution
Let's compute each component step-by-step.
1. Percentage Total Return
The formula for total return is:
Substitute the values:
2. Dividend Yield
The formula for dividend yield is:
Substitute the values:
3. Capital Gains Yield
The formula for capital gains yield is:
Substitute the values:
Summary of Answers
- Percentage Total Return:
- Dividend Yield:
- Capital Gains Yield:
Would you like further details or have any questions?
Here are some related questions for exploration:
- How would these calculations change with a higher dividend?
- What would be the impact if the ending share price was higher than the initial price?
- Can you calculate the total return if dividends were not included?
- What are the implications of a negative capital gains yield in investment analysis?
- How is the total return metric useful for comparing different stocks?
Tip: When analyzing stocks, always separate capital gains yield from dividend yield for a clearer understanding of your returns.
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Math Problem Analysis
Mathematical Concepts
Percentage Total Return
Dividend Yield
Capital Gains Yield
Formulas
Total Return = ((Ending Price - Initial Price + Dividend) / Initial Price) * 100
Dividend Yield = (Dividend / Initial Price) * 100
Capital Gains Yield = ((Ending Price - Initial Price) / Initial Price) * 100
Theorems
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Suitable Grade Level
Grades 11-12
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