An investor had purchased 66 shares of firm X on January 1, at a price of $236 per share. On May 16th, the stock underwent a 2-for-1 split. On December 31, the stock price stood at $156. If the investor realized a return of 35% during the year, his total dividend income during the year was:
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A. B. C. D.A
If the stock had not undergone the split, the year-end price would be 156 * 2 = $312, assuming no informational effects conveyed by the split. The per share income on each stock has been given to be 236 * 0.35 = $82.60. Of this, $(312-236) = $76 is in capital gains. Thus, dividend income per share equals $(82.6-76)
= $6.6. Since the investor held 66 of the original shares, his dividend income equals $6.6 * 66 = $435.6.