Question

Refer to Figure 2.8 and look at the listing for General Dynamics.

a. How many shares could you buy for $20,000? (Round down your answer to the nearest whole number.)

YTD% DN YIELD P/E CHG 21.81 0.14 4,948,832 40.64 21.11 0.92 4.22 9.82 -11.70 46.33 5.74 52 WK 52 WK NAME Gap Gartner GATX Gazit-Globe GCP Applied Technologies Genco Shipping&Trading Gener8 Maritime Generac Holdings General Cable General Dynamics General Electic SYMBOL CLOSE NET CHG VOLUME HIGH GPS IT GMT GZT GCP GNK GNRT GNRC BGC GD GE 5.91 1.50 9.24 0.22 0.65 -0.12 587,975 97.98 77.80 407,499 57.93 33.53 1.60 3.62 8.90 3.95 .. 44.23 0.03 22.45 -043 399,787 22.99 14.47 39.47 12.25 7.02 -0.27 100,083 14.82 4.81 3.1-25.71 318,868 43.75 26.29 35.7 16.96 851,418 21.31 6.21 0.72 4.69 34.82 0.03 ...dd 14.30 142.97 -047 1,375,410 153.76 121.61 3.04 2.13 15.39 4.08 29.87 -0.25 26,458,696 32.05 19.37 0.92 3.08 30.68 4.11 15.35 -0.65 Figure 2.8 Listing of stocks traded on the New York Stock Exchange Source: Complled from data from The Wall Street Journal Online, May 10, 2016.

b. What would be your annual dividend income from those shares

c. What must General Dynamic's earning per share?

Answer 1

(a) Closing Price = $ 142.97 and Amount Invested = $ 20000

Number of Shares that can be bought = 20000 / 142.97 = 139.889 ~ 140

(b) Dividend per Share (DPS) = $ 3.04 and Number of Shares Bought ~ 140

Annual Dividend Income = 140 x 3.4 = $ 425.6

(c) PE Ratio = 15.39 and Price per Share = $ 142.97

Therefore, Earnings Per Share = 142.97 / 15.39 = $ 9.2898 ~ $ 9.29