e201_hw3_spr10_costanzo

Answering question 6 may help you improve your

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Unformatted text preview: s score. Answering question 6 may help you improve your overall homework score at the end of the quarter. See the syllabus for details. (iii) You may discuss the homework with you classmates. However, when you write up your answers, you should do so by yourself. The wording of your answers should not be exact (or nearly exact) duplicates of any of your classmates. 1. Answer this question based upon the week 4 lecture and Morris-Morris required reading. (a) During week 4, the term "dividend yield" was defined. The Morris-Morris reading refers to this as the "percent yield." Explain briefly how the dividend yield is not the same as the total return on holding stock. (b) Can the dividend yield be negative? Can the dividend yield be larger than the total return on a stock? Explain. (c) Draw a partial stock repurchase (also called a buy-back), as explained in Morris-Morris, on a circular flow diagram. There should be no green payment arrows involving the households that the company bought the shares from, which is rare...
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