CFIN
CFIN
5th Edition
ISBN: 9781305661639
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
Question
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Chapter 5, Problem 1PROB
Summary Introduction

T sold 1,000 shares at $29 each which were purchased one year ago at $28 each. T received a quarterly dividend of $0.10 per share during the year.

Yield is the return realized and earned on an investment over a specified period.

Yield=[No. of shares×(Ending priceBeginning price)]+Annual dividendNo. of shares×Beginning price

Expert Solution & Answer
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Explanation of Solution

Calculate the yield as follows:

Yield=[No. of shares×(Ending priceBeginning price)]+Annual dividendNo. of shares×Beginning price=[1,000×($29$28)]+(4×$0.10)1,000×$28=$1,000+$0.4$28,000=0.0357285714285714 or 3.57%

Therefore, the yield is 3.57%.

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