Question

solve question 1&2

-ns 1. Calculating Returns Suppose you bought 100 shares of stock at an initial price of $73 per share. The stock paid a dividend of $0.88 per share during the following year, and the share price at the end of the year was $82. Compute your total dollar return on this investment. Does your answer change if you keep the stock instead of selling it? Why or why not? 2. Calculating Yields In the previous problem, what is the capital gains yield? The dividend yield? What is the total rate of return on the investment?

and question 3 please becuase it depends on 1&2

Answer 1

Formula used in this questions are:
Capital gain= (purchase price-end sell price)*No. of shares
dividend= dividend per share* No. of shares
Total dollar return on investment= capital gain+ dividend

Capital gain yield= (Capital gain/ Cost of investment)*100
Dividend yield= (Dividend/ Cost of investment)*100
​​​​​​Total rate of return on Investment= capital gain yield+ Dividend Yied

Page No. Cahital Gain = (82-73) x 100 = $900 Diosdand 0.88x160 $88 Cost of investment = 73x100 $7300 Total dollar return on investment = 900+88 Yes, the answer would change because whild goin won't take place if we keep the stock Then the total dollar roturn on investrow will be only the dividend income, ie $88. Capital Gain yield = Sahital Gain Cost of Investment 900 7300 xloo = 12.33/4 Dividend Yield Dibelend Cost of investment *100 xloo 12% 7300 Total rate of return on investment = 12.33+ 1.2 = 13.53%

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③ i) Capital Gain = (68.4-73) × 750 =$-3 450 (Loss) Cost of investment = 73x750 = $ 54,750 Dividend 0.88 X750 = $ 660 ) Total dollar return on investment = 660-3450 =$-2790 (Loss) ii) Capital Gain rield = -3450 x 100 = .6.3% (Los) 54750 Dividend yield 1.21 % 660 xloo 54750 Total Rate of Return on Investment = 1.21-6.3 -5.09%