Fin 320 Final Exam

You purchased a stock at a price of $42.90. The stock paid a dividend of $1.59 per share and the stock price at the end of the year is $48.55. What is the capital gains yield? - Answer- Capital gains yield = ($48.55 - 42.90)/$42.90 Capital gains yield = .1317, or 13.17% Suppose a stock had an initial price of $91 per share, paid a dividend of $1.80 per share during the year, and had an ending share price of $108. a. Compute the percentage total return. b. What was the dividend yield? c. What was the capital gains yield? - Answer- R = [($108 - 91) + 1.80]/$91 R = .2066, or 20.66% Dividend yield = $1.80/$91 Dividend yield = .0198, or 1.98% Capital gains yield = ($108 - 91)/$91 Capital gains yield = .1868, or 18.68% A stock had returns of 18.58 percent, −5.58 percent, and 20.81 percent for the past three years. What is the variance of the returns? - Answer- Average return = (.1858 − .0558 + .2081)/3 Average return = .1127, or 11.27% Variance = 1/2[(.1858 − .1127)2 + (−.0558 − .1127)2 + (.2081 − .1127)2] Variance = .02142 A bond had a price of $946.02 at the beginning of the year and a price of $979.58 at the end of the year. The bond's par value is $1,000 and its coupon rate is 5.1 percent. What was the percentage return on the bond for the year? - Answer- Bond return = ($979.58 - 946.02 + 51) / $946.02 Bond return = .0894, or 8.94% You purchased a stock at a price of $50.20. The stock paid a dividend of $1.99 per share and the stock price at the end of the year is $56.35. What was the dividend yield? - Answer- Dividend yield = $1.99/$50.20 Dividend yield = .0396, or 3.96% You purchased GARP stock one year ago at a price of $66.51 per share. Today, you sold your stock and earned a total return of 18.63 percent. The stock paid dividends of $2.76 per share over the year. What was the capital gains yield on your investment? - Answer- Dividend yield = $2.76/$66.51 Dividend yield = .0415, or 4.15% Cap