One year ago, Richard purchased $1,260 worth of Double GG Corporation common stock for $42 per share. During the year, Richard received two dividend payments, each equal to $.05 per share. The current market value of the stock is $44 per share. What yield did Richard earn on his investment during the year

Yield earned by Richard on his investment during the year is 5%.

Explanation:

This can be calculated as follows:

Number of shares purchased = Worth of common stock one year ago / Price per share one year ago = $1,260 / $42 = 30 shares

Total dividend received during the year = Number of shares purchased * Dividend per share * 2 = 30 * $0.05 * 2 = $3

Current worth of common stock = Number of shares purchased * Current market value per share = 30 * $44 = $1,320

Yield earned during the year = (Current worth of common stock - Worth of common stock one year ago + Total dividend received during the year) / Worth of common stock one year ago = ($1,320 - $1,260 + $3) / $1,260 = 0.05, or 5%

Therefore, yield earned by Richard on his investment during the year is 5%.

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