Use the table for the question(s)below.
Consider the following price and dividend data for General Electric Company:
-Assume that you purchased General Electric Company stock at the closing price on December 31,2008 and sold it after the dividend had been paid at the closing price on January 26,2009.Your total return rate (yield)for this period is closest to:
A)0.75%.
B)-8.80%.
C)0.70%.
D)-8.13%.

Question

Use the table for the question(s)below.
Consider the following price and dividend data for General Electric Company: 
-Assume that you purchased General Electric Company stock at the closing price on December 31,2008 and sold it after the dividend had been paid at the closing price on January 26,2009.Your total return rate (yield)for this period is closest to:
A)0.75%. 
B)-8.80%. 
C)0.70%. 
D)-8.13%.

Quizplus · Accepted Answer

First, we need to find the dividend per share. We can do this by subtracting the closing price on the ex-dividend date (January 22, 2009) from the closing price on the previous day (January 21, 2009) and rounding to two decimal places:

Dividend per share = (16.48 - 16.15) = 0.33

Next, we calculate the total return rate (yield) for the period:

Total return rate = (Ending price - Beginning price + Dividend) / Beginning price

Total return rate = (15.20 - 16.07 + 0.33) / 16.07

Total return rate = -0.0548 or -5.48%

Since the answer choices are not given in percentage form, we must convert the answer to the closest choice. The closest choice is D) -8.13%.

Use the Table for the Question(s)below