Chapter+10 - Chapter 10 Dollar & Percent Returns Total...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 1-1 Dollar & Percent Returns • Total dollar return = the return on an investment measured in dollars • $ Return = Dividends + Capital Gains • Capital Gains = Price received – Price paid • Total percent return = the return on an investment measured as a percentage of the original investment. • % Return = $ Return/$ Invested Percent Return t t t t t t t t t P P P D CGY DY P P P CGY P D 1 1 1 1 Return % Return % Dividend Yield Capital Gains Yield Example: Calculating Total Dollar and Total Percent Returns • You invest in a stock with a share price of $25. • After one year, the stock price per share is $35 • Each share paid a $2 dividend • What was your total return? Dollars Percent Dividend $2.00 $2/25 = 8% Capital Gain $35 - $25 = $10 $10/25= 40 % Total Return $2 + $10 = $12 $12/$25 = 48% Figure 10.4 U.S. Financial Markets The Historical Record: 1925- 2008 Risk–Return Tradeoff Two key lessons from capital market history: – There is a reward for bearing risk – The greater the potential reward, the greater the risk Year-to-Year Total Returns Large-Company Stock Returns
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/04/2011 for the course FIN 101 taught by Professor Staff during the Fall '11 term at Texas State.

Page1 / 3

Chapter+10 - Chapter 10 Dollar & Percent Returns Total...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online