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Suppose a stock had an initial price of $87 per share, paid a dividend of $2.15 per share during the year, and had an ending share price of $78. a. Compute the percentage total return. (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.) b. What was the dividend yield

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hyderali230

Answer:

Percentage of total return is -7.87

Dividend yield is 2.47%

Explanation:

Rate of return is the rate of income earned during the period in which the investment is held. It includes any income in the form of dividend and price difference.

Dividend received = $2.15

Price difference = Current price  - Initial Price = $78 - $87 = -9

Rate of return = ( ( Dividend received + Price change ) / Initial price ) x 100

Rate of return =  ( ( $2.15 + (-9) ) / 87 ) x 100

Rate of return  = ( -6.85 / $87 ) x 100

Rate of return = -7.87%

Dividend Yield = Dividend / Current Stock price = $2.15 / $87 = 0.0247 = 2.47%