Question

Say that your broker charges you a commission of $1,340.75 for your purchase of 258 shares of stock in Ergar Appliances. If Ergar Appliances has a list price of $73.96 and pays a dividend of $11.45 per share, what is your annual yield?
a.
0.1548
b.
0.1446
c.
0.1924
d.
0.0691

Answer 1

Dividend income = 258 × \$11.45 = \$2,954.10.
Total cost = 258 × \$73.96 + \$1,340.75 = \$19,081.68 + \$1,340.75 = \$20,422.43.
Yield = 2,954.10 / 20,422.43 ≈ 0.14465 ≈ 0.1446 (14.46%).

Answer: b.