The following problem refers to the stock table for ABC Inc. (a tire company) given below. Use the stock table Vol 52-Week Yld Net Low Stock SYM Div % PE 100s Hi Lo Close Chg High 73.82 45.24 ABC Inc. ABC 1.78 1.6 17 5915 59.61 57.67 58.19 +1. 12 c. What is the annual return for the dividends alone? How does this compare to a bank offering a 3% interest r. 1.6 % OA. The yield is lower, and investing in the bank account is always the best option in this case. B. The yield is lower, but there is still the potential to get a better return on the stock investment. d. How many shares of this company's stock were traded yesterday?
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
![### Stock Table Exercise
The following problem refers to the stock table for **ABC Inc.** (a tire company). Use the stock table to answer the questions below.
| 52-Week | | | | Div | Yld | | Hi | | Lo | | Close | Net |
|---------|-----------|------------|---------|-------|-----|----|----|----|----|-------|--------|
| High | Low | Stock | SYM | | % | PE | | | | | Chg |
| 73.82 | 45.24 | ABC Inc. | ABC | 1.78 | 1.6 | 17 | 5915 | 59.61 | 57.67 | 58.19 | +1.12 |
#### Questions:
**c. What is the annual return for the dividends alone? How does this compare to a bank offering a 3% interest rate?**
- **Answer:** 1.6%
**Options:**
- ☐ A: The yield is lower, and investing in the bank account is always the best option in this case.
- ☑ B: The yield is lower, but there is still the potential to get a better return on the stock investment.
**d. How many shares of this company’s stock were traded yesterday?**
- **Answer:** [Enter number of shares traded]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbd6707de-f1a3-40ea-b8a9-5ef3c19e40c3%2F245068f5-10c9-4571-82f4-d1e419756d95%2Fpz0k0hj_processed.jpeg&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
