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QUESTION

A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $2 per share and sells for $46. a. What is the total rate

A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $2 per share and sells for $46.

a. What is the total rate of return on the stock? (Enter your answer as a whole percent.)

b. What are the dividend yield and percentage capital gain? (Enter your answers as a whole percent.)

c. Now suppose the year-end stock price after the dividend is paid is $34. What are the dividend yield and percentage capital gain in this case? (Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.)

d. Is there any change in the dividend yield calculated in parts (b) and (c)?

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