Part 1: Blair purchased 300 shares of stock last year at a total cost of $13,380
ID: 2652409 • Letter: P
Question
Part 1:
Blair purchased 300 shares of stock last year at a total cost of $13,380. He has received a total of $600 in dividends on these shares. Today, Blair sold the shares at a price per share of $35. What is his total return in dollars on this investment?
$300
$-2,280
$-2,580
$-300
Part 2:
Chase Bank pays an annual dividend of $1.17 per share on its common stock. One year ago, this stock sold for $54.00 per share. Today, the stock is priced to sell at $32.20 a share. What is the capital gains yield?
-33.62 percent
-38.18 percent
-29.45 percent
-40.37 percent
Part 3:
A stock produced the following returns over the past 5 years: 13.5 percent, 4.3 percent, -14.4 percent, 22.9 percent, and 11.3 percent. What is the arithmetic average risk premium for this stock if the average risk-free rate for the period was 4.4 percent?
3.12 percent
3.82 percent
2.92 percent
3.62 percent
Blair purchased 300 shares of stock last year at a total cost of $13,380. He has received a total of $600 in dividends on these shares. Today, Blair sold the shares at a price per share of $35. What is his total return in dollars on this investment?
Explanation / Answer
Part1 Sales of shares(300*35) 10,500.00 Dividend 600.00 Purchase 13,380.00 Net Loss(Sales+Div-Pur) (2,280.00) Part2 Selling price 32.20 Purchase Price 54.00 Capital Loss(Sales- purchase) (21.80) Capital Gain Yield(Cap Gain/ Pur Price) -40.37% Part3 Average return(13.5+4.3-14.4+22.9+11.3)/5 7.52% Rf 4.40% Return = Rf+ Risk prem 7.52% = 4.40+ Risk prem Risk prem = 3.12%