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ACCA Strategic Professional · Advanced Financial Management · The role and responsibility of senior financial executive/advisor

Orion plc has 10 million shares in issue. Its share price at the start of the year was $4.00 and at the end of the year was $4.30. During the year it paid a dividend of $0.20 per share. What was the total shareholder return for the year?

Total shareholder return is 12.5%. It is the share price gain of $0.30 plus the $0.20 dividend, giving $0.50, divided by the opening price of $4.00. Options that count only the capital gain or only the dividend understate the return.

  1. A7.5%
  2. B12.5%Correct
  3. C5.0%
  4. D7.0%

Explanation

Total shareholder return = (capital gain + dividend) / opening price = (0.30 + 0.20) / 4.00 = 12.5%. Using only the capital gain gives 7.5%, which ignores the dividend. Using only the dividend gives 5.0%.

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