Hi, Reference: PEQ Sep 2014, Q6 (revision book q.20) The solution to (i) (c) in the model solution section doesn't show workings for each quarter and just gives the returns. Using the formula on page 54 of the revision book and from the notes of: TR = (I(t) - I(t-1) + XD(t) - XD(t-1) ) / I(t-1) And calculating XD(t) as I(t) x div yield / 4 at t ...it doesn't seem to tie up. E.g. For TR(2): XD(1) = 1603 * 0.043 / 4 = 17.23 XD(2) = 1776 * 0.042 / 4 = 18.65 TR(2) = ( 1776 - 1603 + 18.65 - 17.23 ) / 1603 = 10.88% though answer shows 11.96% The rest don't tie up either.
Don't forget the XD index is cumulative. So XD(2)=XD(1)+18.65. So the income in period (2) = XD(2) - XD(1) = 18.65.