Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter 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 of XYZ one year ago for $50 per share and sold it today for $55 per share. It paid a $1 per share dividend today. What was your realized return? How much of the return came from dividend yield and how much came from capital gain?        Assuming that the stock fell $5 to $45 instead. Is your capital gain different? Why or why not? Is your dividend yield different? Why or why not?

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Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book

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