Discussion:
Use the following formula to answer problems on shareholder returns, where Pt is the share price at time t, and Dt is the dividend paid at time t.
Shareholder Return = D2/P1 + P2-P1/P1
Emaline Returns. If the share price of Emaline, a New Orleans-based shipping firm, rises from $12 to $15 over a one-year period, what is the rate of return to the shareholder given each of the following:
a. The company paid no dividends
b. The company paid a dividend of $1 per share
c. The company paid the dividend and the total return to the shareholder is separated into the dividend yield and the capital gain