EBK CORPORATE FINANCE
EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103145947
Author: DeMarzo
Publisher: PEARSON
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Chapter 10, Problem 4P

a)

Summary Introduction

To determine: The realized return.

Introduction:

Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.

b)

Summary Introduction

To determine: The return from dividend yield and return from capital gain.

Introduction:

Dividend yield refers to the percentage of the initial price of the share received as a dividend. Capital yield refers to the change in the value of investment stated in terms of percentage.

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You bought a stock one year ago for $48.32 per share and sold it today for $44.64 per share. It paid a $1.14 per share dividend today. a. What was your realized return? b. How much of the return came from dividend yield and how much came from capital gain?
If current price of stock is $25 and you hold it for one year and received dividend of $2.5. You sold it at $27. How much return you received? Show dividend yield and capital gain separately.
You bought a share of stock for $100. It is now worth $105 and has just paid an annual dividend of $4 per share. What was the dividend yield? What was the capital gains yield? What was the total rate of return?

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EBK CORPORATE FINANCE

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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY