Finance - Exam 3 ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
A stock is selling today for $25 per share. At the end of a.
the year, it pays a dividend of $2 per share and sells for Rate of return: 28%
$30.
b.
Dividend yield: 8%
a. What is the total rate of return on the stock? Capital gains yield: 20%
b. What are the dividend yield and percentage capital
gain? a.
Rate of return = capital gain + dividend
initial share price
($30 − $25) + $2
= 0.28 = 28%
$25
b.
Dividend yield = dividend/initial share price = $2/$25 = 0.08 = 8%
Capital gains yield = capital gain/initial share price = $5/$25 = 0.20 = 20%
, A stock is selling today for $50 per share. At the end of a.
the year, it pays a dividend of $5 per share and sells for Rate of return: 26%
$58.
b.
a. What is the total rate of return on the stock? Dividend yield: 10%
Capital gains yield: 16%
b. What are the dividend yield and percentage capital
gain?
a.
Rate of return = capital gain + dividend
initial share price
($58 − $50) + $5
= 0.26 = 26%
$50
b.
Dividend yield = dividend/initial share price = $5/$50 = 0.10 = 10%
Capital gains yield = capital gain/initial share price = $8/$50 = 0.16 = 16%
You purchase 100 shares of stock for $50 a share. The Rate of Return, Real Rate of Return
stock pays a $4 per share dividend at year-end. What is a. $46 0% -2.91%
the rate of return on your investment for the end-of-year b. $50 8% 4.85%
stock prices listed below? What is your real (inflation- c. $52 12% 8.73%
adjusted) rate of return? Assume an inflation rate of 3%.
You purchase 100 shares of stock for $50 a share. The Rate of Return, Real Rate of Return
stock pays a $2 per share dividend at year-end. What is a. $48 0% -2.91%
the rate of return on your investment for the end-of-year b. $50 4% 0.97%
stock prices listed below? What is your real (inflation- c. $54 12% 8.73%
adjusted) rate of return? Assume an inflation rate of 3%.
A stock is selling today for $25 per share. At the end of a.
the year, it pays a dividend of $2 per share and sells for Rate of return: 28%
$30.
b.
Dividend yield: 8%
a. What is the total rate of return on the stock? Capital gains yield: 20%
b. What are the dividend yield and percentage capital
gain? a.
Rate of return = capital gain + dividend
initial share price
($30 − $25) + $2
= 0.28 = 28%
$25
b.
Dividend yield = dividend/initial share price = $2/$25 = 0.08 = 8%
Capital gains yield = capital gain/initial share price = $5/$25 = 0.20 = 20%
, A stock is selling today for $50 per share. At the end of a.
the year, it pays a dividend of $5 per share and sells for Rate of return: 26%
$58.
b.
a. What is the total rate of return on the stock? Dividend yield: 10%
Capital gains yield: 16%
b. What are the dividend yield and percentage capital
gain?
a.
Rate of return = capital gain + dividend
initial share price
($58 − $50) + $5
= 0.26 = 26%
$50
b.
Dividend yield = dividend/initial share price = $5/$50 = 0.10 = 10%
Capital gains yield = capital gain/initial share price = $8/$50 = 0.16 = 16%
You purchase 100 shares of stock for $50 a share. The Rate of Return, Real Rate of Return
stock pays a $4 per share dividend at year-end. What is a. $46 0% -2.91%
the rate of return on your investment for the end-of-year b. $50 8% 4.85%
stock prices listed below? What is your real (inflation- c. $52 12% 8.73%
adjusted) rate of return? Assume an inflation rate of 3%.
You purchase 100 shares of stock for $50 a share. The Rate of Return, Real Rate of Return
stock pays a $2 per share dividend at year-end. What is a. $48 0% -2.91%
the rate of return on your investment for the end-of-year b. $50 4% 0.97%
stock prices listed below? What is your real (inflation- c. $54 12% 8.73%
adjusted) rate of return? Assume an inflation rate of 3%.
