You purchased one share of Sophia Enterprises common stock for $30 today. If the stock pays a dividend of
$6.50 in one year, and sells for $32.50 at that time, what will the dividend yield, growth rate, and total rate of
return be for the year?
What will be an ideal response?
Dividend yield = Div/price = $6.50/$30 = 21.67%
Growth rate = change in price = ($32.50 - $30)/$30 = 8.33%
Total rate of return = Div. yield + growth rate = 30%
Business
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