You purchased a stock at the beginning of the year for $80.25. Your total return for the year was 10.2%, and the stock had a dividend yield of 1.8%. What was the end of year stock price?
A) $84.73
B) $85.02
C) $86.99
D) $88.44
E) $89.56

Question

Quizplus · Accepted Answer

The total return of 10.2% includes both the price appreciation and the dividend yield. To find the end of year stock price, you first calculate the amount of return from the price appreciation alone by subtracting the dividend yield from the total return: 10.2% - 1.8% = 8.4%. Then, you calculate the price appreciation in dollars: $80.25 * 8.4% = $6.74. Finally, add this to the original price to find the end of year stock price: $80.25 + $6.74 = $86.99.

You Purchased a Stock at the Beginning of the Year