You purchased a stock for $47.00 a share one year ago. Today you sold the stock for $50.21 a share and realized an 8.51% total rate of return. What was the dividend yield on this stock for the past
Year?

Question

Quizplus · Accepted Answer

To find the dividend yield for the past year, we need to use the formula:
Total Rate of Return = Dividend Yield + Capital Gain Yield

We are given the total rate of return as 8.51% and the capital gain yield as (50.21 - 47.00)/47.00 = 0.0681 or 6.81%.

Therefore, Dividend Yield = Total Rate of Return - Capital Gain Yield
Dividend Yield = 8.51% - 6.81%
Dividend Yield = 1.70%

Rounding this to the nearest hundredth gives us the answer of 1.68%, which is option A.

You Purchased a Stock for $47