NSWMaths Standard 2Syllabus dot point

How are share investments analysed using dividends, yields and price-earnings ratios?

Calculate dividend yield, dividend payout, capital gain and total return on share investments

A focused answer to the HSC Maths Standard 2 dot point on shares. Dividend per share, dividend yield, capital gain, total return, and the price-earnings ratio with worked Australian ASX examples.

Generated by Claude OpusReviewed by Better Tuition Academy7 min answerUpdated 2026-05-20

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What this dot point is asking

NESA wants you to compute the financial return on a share investment in two parts (income from dividends, and capital gain or loss from price changes), and to compute related ratios such as dividend yield and price-earnings ratio.

The answer

Dividend per share

A dividend is a cash payment a company pays to shareholders out of its profit. It is usually quoted per share, in dollars and cents.

If a company pays a total dividend of $D$ across $n_{\text{shares}}$ shares on issue:

\text{dividend per share} = \frac{D}{n_{\text{shares}}}.

For an investor holding $k$ shares, the dividend received is $k \times$ (dividend per share).

Dividend yield

Dividend yield expresses the dividend as a percentage of the share price:

\text{yield} = \frac{\text{dividend per share}}{\text{share price}} \times 100\%.

Higher yields tend to come from mature companies (banks, telcos, utilities); growth companies often pay low or no dividends because they reinvest profits.

Capital gain or loss

Capital gain is the increase in share price over the holding period.

\text{capital gain} = \text{shares held} \times (\text{selling price} - \text{purchase price}).

Negative result is a capital loss.

Total return

Total return combines income (dividends received) and capital gain or loss:

\text{total return (\$)} = \text{total dividends} + \text{capital gain}.

As a percentage of the original investment:

\text{total return (\%)} = \frac{\text{total dividends} + \text{capital gain}}{\text{original investment}} \times 100\%.

Price-earnings ratio

The price-earnings ratio compares the share price to the company's earnings per share:

\text{P/E} = \frac{\text{share price}}{\text{earnings per share}}.

A higher P/E suggests the market is paying more for each dollar of current earnings, often because it expects strong growth. The ASX market average P/E typically sits between $14$ and $20$ .

Franking credits

In Australia, dividends are often franked (or partly franked), meaning the company has already paid corporate tax on the profit being distributed. This is examinable only in worded form (the question will tell you the cash amount); you do not need to compute the gross-up.

Worked example

Dividend yield

A share trades at $\$ 32.50 $and pays an annual dividend of$ \ $1.95$ .

Yield $= \frac{1.95}{32.50} \times 100\% = 6.00\%$ .

Total return calculation (Australian context)

An investor buys $250$ Telstra shares at $\$ 3.80 $each in 2024. By the end of the year, the price is$ \ $4.10$ and total dividends of $\$ 45$ were paid.

Purchase: $250 \times 3.80 = \$ 950$.

Capital gain: $250 \times (4.10 - 3.80) = 250 \times 0.30 = \$ 75$.

Total return (\ $):$ 75 + 45 = \ $120$ .

Total return (%): $\frac{120}{950} \times 100\% \approx 12.63\%$ .

Capital loss

An investor buys $1000$ shares of a mining company at $\$ 8.20 $. A year later the share price is$ \ $6.40$ and dividends total $\$ 200$.

Capital loss: $1000 \times (6.40 - 8.20) = -\$ 1800$.

Total return (\ $):$ 200 + (-1800) = -\ $1600$ . A net loss for the year.

Total return (%): $\frac{-1600}{8200} \times 100\% \approx -19.5\%$ .

P/E ratio

A share trades at $\$ 60 $and reports earnings per share of$ \ $3$ . P/E $= \frac{60}{3} = 20$ . The market is paying $\$ 20 $for each$ \ $1$ of current annual earnings.

Past exam questions, worked

Real questions from past NESA papers on this dot point, with our answer explainer.

2022 HSC Q122 marksA share is bought at

\

25.40

. The company pays a dividend of

1.27

per share. Find the dividend yield correct to two decimal places.

Show worked answer →

Dividend yield = $\frac{\text{dividend per share}}{\text{share price}} \times 100\%$ .

Yield $= \frac{1.27}{25.40} \times 100\% \approx 5.00\%$ .

Markers reward the formula, substitution, and the answer to two decimal places with the percent sign.

2023 HSC Q174 marksAn investor buys

400

Commonwealth Bank shares at

\

98.50

each. After a year the share price is

104.20

and a total dividend of

\

1680$ has been paid. Find the capital gain, dividend yield, and total return for the year.

Show worked answer →

Purchase: $400 \times 98.50 = \$ 39400$.

Capital gain: $400 \times (104.20 - 98.50) = 400 \times 5.70 = \$ 2280$.

Dividend yield: $\frac{1680}{39400} \times 100\% \approx 4.26\%$ .

Total return (\ $):$ 2280 + 1680 = \ $3960$ .

Total return (%): $\frac{3960}{39400} \times 100\% \approx 10.05\%$ .

Markers reward the capital gain calculation, dividend yield based on the original investment, and the total-return percentage. Some marking guides accept total return based on either the original or the closing investment value, but be explicit about which.

What this dot point is asking

The answer

Dividend per share

Dividend yield

Capital gain or loss

Total return

Price-earnings ratio

Franking credits

Past exam questions, worked

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