COMM 121 Chapter Notes - Chapter 10: Cash Flow, Capital Market, Dividend Yield
9 Oct 2013
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Chapter 10: risk and return: lessons from market history. Come in the form of dividends and capital gains: total earnings = dividends + capital gains (loss) If you decide to sell the stock your earnings = initial investments + total returns. Expressing the dividend as a percentage of the beginning stock price results in the dividend yield = dt+1/pt. Second component on percentage return is the capital gains yield: = (pt+1-pt)/pt, total returns (rt+1) = dt+1/pt + (pt+1-pt)/pt. Investors look to capital market history as a guide to the risks and returns of alternative portfolio strategies.
