Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259277214
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 10, Problem 10.1C
Section 10.1 Say you buy a share of stock for $50. Its price rises to $55, and it pays a $2 annual dividend. You do not sell the stock. What is your dividend yield for the year?
Expert Solution & Answer
Summary Introduction
To determine: The current dividend yield for the year.
Dividend yield is the determination of dividend price per share. This indicates that how much the company pays each year in relation to its share price.
Answer to Problem 10.1C
The current dividend yield for the year is 4%.
Explanation of Solution
Given information:
Person X buys share of stock for $50. Its price rises to $55, and it pays a $2 annual dividend. Person X did not sell the stocks.
The formula to calculate the dividend yield:
Compute the current dividend yield for the year:
Hence, the dividend yield for the year is 4%.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
A stock you purchased for $80 has paid out $2.50 in dividends. The stock is now selling for $100. If you were to sell, what would your capital gains yield be?
Please help
11. I need help with finance home work question asap please
A stock that currently sells for $120 has EPS of $20.75. What is the annual rate of return on this stock if the company is expected to pay a dividend per share in the amount of $18 each year forever?
Chapter 10 Solutions
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 10.1 - Prob. 10.1ACQCh. 10.1 - Why are unrealized capital gains or losses...Ch. 10.1 - What is the difference between a dollar return and...Ch. 10.2 - Prob. 10.2ACQCh. 10.2 - Prob. 10.2BCQCh. 10.2 - Prob. 10.2CCQCh. 10.2 - Prob. 10.2DCQCh. 10.2 - Prob. 10.2ECQCh. 10.2 - Prob. 10.2FCQCh. 10.3 - What do we mean by excess return and risk premium?
Ch. 10.3 - Prob. 10.3BCQCh. 10.3 - Prob. 10.3CCQCh. 10.3 - What is the first lesson from capital market...Ch. 10.4 - In words, how do we calculate a variance? A...Ch. 10.4 - Prob. 10.4BCQCh. 10.4 - Prob. 10.4CCQCh. 10.4 - What is the second lesson from capital market...Ch. 10.5 - Prob. 10.5ACQCh. 10.5 - Prob. 10.5BCQCh. 10.6 - What is an efficient market?Ch. 10.6 - Prob. 10.6BCQCh. 10 - Section 10.1Say you buy a share of stock for 50....Ch. 10 - Prob. 10.3CCh. 10 - Prob. 10.4CCh. 10 - Prob. 10.5CCh. 10 - Prob. 10.6CCh. 10 - Prob. 1CTCRCh. 10 - Prob. 2CTCRCh. 10 - Risk and Return. We have seen that over long...Ch. 10 - Market Efficiency Implications. Explain why a...Ch. 10 - Prob. 5CTCRCh. 10 - Prob. 6CTCRCh. 10 - Prob. 7CTCRCh. 10 - Prob. 8CTCRCh. 10 - Efficient Markets Hypothesis. There are several...Ch. 10 - Prob. 10CTCRCh. 10 - Prob. 1QPCh. 10 - Prob. 2QPCh. 10 - Prob. 3QPCh. 10 - Prob. 4QPCh. 10 - Nominal versus Real Returns. What was the...Ch. 10 - Bond Returns. What is the historical real return...Ch. 10 - Prob. 7QPCh. 10 - Prob. 8QPCh. 10 - Prob. 9QPCh. 10 - Calculating Real Returns and Risk Premiums. For...Ch. 10 - Prob. 11QPCh. 10 - Prob. 12QPCh. 10 - Calculating Returns. You purchased a zero-coupon...Ch. 10 - Prob. 14QPCh. 10 - Prob. 15QPCh. 10 - Calculating Real Returns. Refer to Table 10.1....Ch. 10 - Return Distributions. Refer back to Figure 10.10....Ch. 10 - Prob. 18QPCh. 10 - Prob. 19QPCh. 10 - Arithmetic and Geometric Returns. A stock has had...Ch. 10 - Prob. 21QPCh. 10 - Prob. 22QPCh. 10 - Prob. 23QPCh. 10 - Prob. 24QPCh. 10 - Prob. 25QPCh. 10 - Prob. 26QPCh. 10 - Prob. 27QPCh. 10 - Prob. 28QPCh. 10 - Prob. 1CCCh. 10 - Prob. 2CCCh. 10 - Prob. 3CCCh. 10 - Prob. 4CCCh. 10 - Prob. 5CC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- .Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a.If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends. b.If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call? c.Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid.13.arrow_forwardYou purchase 1,000 shares of WMT (Walmart) for $143 per share. A year later, you sell the stock for $166 per share. You receive a dividend of $2.27 a share. a.What is your total dollar return? b. What are your dividend yield, capital gain yield, and total percentage return? Note: don't use chat gpt.arrow_forward3. U.S Technologies preferred stock sells for $80 and pays $9 each year in dividends. What is the expected rate of return?arrow_forward
- Suppose you have just purchased a share of stock for $58.50. You expect a dividend next period of $2.50 which will grow at a rate of 15% indefinitely. What must your expected rate of return be on the stock you have just purchased? Select one: A. 4.27% B. 15.38% C. 19.27% D. 19.91% E. None of the abovearrow_forwardYou are considering acquiring a common stock that you would like to hold for one year. You expect to receive both $0.75 in dividends and $16 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is _____ if you wanted to earn a 12% return. A. $23.91 B. $26.52 C. $27.50 D. $14.96 E. None of the options are correct.arrow_forwardA stock is selling today for $75 per share. At the end of the year, it pays a dividend of $6 per share and sells for $81. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $69. What are the dividend yield and percentage capital gain in this case?arrow_forward
- Monmouth Laboratories, Inc. pays a $3.29 dividend every year and will maintain this policy forever. What price should you pay for one share of common stock if you want an annual return of 7.5% on your investment? Select one: a. $43.87 b. $21.92 c. $43.84 d. $44.84 e. $43.20arrow_forwardSuppose you bought XYZ stock 1 year ago for $6.54 per share and sell it at $2.79. You also pay a commission of $0.35 per share on your sale. What is the total return on your investment? The total return is %?arrow_forwardSolve the problem with complete solution. 4. A stock pays an annual dividend of 80 per share. If the stock is trading at 1,500, what is the dividend yield?arrow_forward
- 1) A reasonable way to put a value on a share of stock is to discount the stream of expected future dividends (annual payments to the shareholder) by the so-called opportunity cost of money (the interest rate you could get from the bank if you didn't hold on to the stock). If a share of stock is anticipated to pay a $5 dividend annually for the next five years and then $8 every year after that in perpetuity, what would the share be worth according to this model if the cost of money is 4%? Dividends are paid at the end of a year.arrow_forwardCompany X pays dividend of $2.25 next year. Dividend grows at 5% per year forever. Investor A wants to buy this stock. Investor A expects return of 10%. What is the maximum amount A pays to buy Stock X? a) $47.25 b) $45.00 c) $49.50 d) $40.91arrow_forwardValuing a share of a stock (P) that pays a constant dividend forever: Assume you expect the dividend to be $1.50 in one year (not right away, but wait one year out. Required rate of return is 5%. What is the Price of a share of this stock? $42 ○ $1500 $30 None of the above 易arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY