Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
You purchased a stock for $120 per share today
You purchased a stock for $120 per share today. It will pay a dividend of $8 next month. If you can sell it for $130 right after the dividend is paid, what would be:
a) The dividend yield?
b) What would be its capital gain?
c) What would be its total holding rate of return?
Expert Solution
Purchase Price of Stock = $120
Dividend to be paid next month = $8
Price of STock next month = $130
a). Dividend Yield = Dividend/Current or Purchase price = $8/$120
Dividend Yield = 6.67%
b) Capital gain =Price of STock next month - Purchase Price of Stock
Capital gain = $130 - $120
Capital gain = $10
c) Total Holding Rate of Return= (capital gain + Dividend)/Purchase Price
Total Holding Rate of Return = ($10 + $8)/$120
Total Holding Rate of Return = 15%
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
