Question

UJU's dividend next year is expected to be $1.50. It is trading at $45 and is expected to grow at 9 percent per year. What is JUJU's dividend yield and capital gain?

		3.33 percent; 9 percent
		9 percent; 3.33 percent
		1.5 percent; 6 percent
		6 percent; 1.5 percent

Answer 1

Dividend Yield =Annual Dividend / Current Price *100

= $ 1.50 / $ 45

= $ 3.33%

Capital Gain =[ Price after a year - Price today ] / Price today *100

= [ {$ 45 * (1+ growth rate) ] - $ 45} ]/ 45*100

= [ {$ 45 * (1.09) ] - 45}]/45*100

= 9%

Hence the correct answer is

3.33 percent; 9 percent