ACCA Strategic Professional · Advanced Financial Management · Financial strategy formulation
Kestrel plc has a share price of $4.50 at the start of the year and $4.86 at the end. It pays a dividend of $0.18 per share during the year. What is the total shareholder return for the year?
Total shareholder return is 12.0%. The capital gain of $0.36 plus the dividend of $0.18 gives $0.54, which divided by the opening price of $4.50 equals 12%. Counting only the capital gain would give 8%, which understates shareholder return.
- A8.0%
- B12.0%Correct
- C4.0%
- D10.0%
Explanation
Capital gain = 4.86 - 4.50 = 0.36. Add dividend 0.18 = 0.54. TSR = 0.54/4.50 = 12.0%. The 8.0% figure counts only the capital gain, omitting the dividend.
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