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    Stock's dividend yield

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    One year ago, you bought 500 shares of Webster, Inc., stock at $37 per share. You just received

    a dividend of $1,000 and Webster stock now sells for $38.

    a. How much did you earn in capital gains?

    b. What was your total dollar return?

    c. What was your percentage return?

    d. What was the stock's dividend yield?

    Problem 2

    Two years ago, General Materials and Standard Fixtures' stock prices were the same. Over the first year, General Materials' stock price increased by 10 percent while Standard Fixtures' stock price decreased by 10 percent. Over the second year, General Materials' stock price decreased by 10 percent and Standard Fixtures' stock price increased by 10 percent. Do these two stocks have the same prices today? Demonstrate your answer by assuming that both stock prices were $7 two years ago.

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    Solution Preview

    One year ago, you bought 500 shares of Webster, Inc., stock at $37 per share. You just received

    a dividend of $1,000 and Webster stock now sells for $38.

    a. How much did you earn in capital gains?

    Earnings in Capital gains=
    =Sales-Purchase
    =500*(38-37)
    =$500.00

    b. What was your total dollar return?

    =Capital Gain+Dividend
    ...

    Solution Summary

    Response provides the computation of stock's dividend yield

    $2.19

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