Steve Bought a Share of Toronto Skates Inc

question 33

Multiple Choice

Steve bought a share of Toronto Skates Inc.three years ago for $45.00.He was paid two annual dividends of $4.50 in the past two years.If the stock price today is $ 48.50, which of the following are the three year's income yield (IY) , capital gain (CGY) , and total return (TR) .

• A)IY=7.78%, CGY=20.00%, TR=27.78%
• B)IY=20.00%, CGY=9.26%, TR=29.26%
• C)IY=20.00%, CGY=7.78%, TR=27.78%
• D)IY=7.78%, CGY=9.26%, TR=17.04%

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Definitions:

Consumer Surplus

The contrast in the overall payment consumers have the willingness and fiscal capability to make for a good or service, compared to the payment they actually make.

Perfectly Price-Discriminating Monopoly

A theoretical market structure in which a monopolist charges each consumer the maximum they are willing to pay, capturing all consumer surplus.

Profit-Maximizing Level

The point at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.

Efficient

The characteristic of maximizing productivity with minimal waste, effort, or expense.