You purchased 1,000 shares of GHI Holdings common stock at a price of $22 per sh

Question

You purchased 1,000 shares of GHI Holdings common stock at a price of $22 per share. A year later, immediately after the company paid a divided of $1.50 per share, you liquidated your entire position (i.e., you sold all of your 1,000 shares) at a price of $26.

Based on this information, what is the capital gains rate (or capital gains yield) for this transaction?

You purchased 1,000 shares of GHI Holdings common stock at a price of $22 per share. A year later, immediately after the company paid a divided of $1.50 per share, you liquidated your entire position (i.e., you sold all of your 1,000 shares) at a price of $26.

Based on this information, what is the capital gains rate (or capital gains yield) for this transaction?

Explanation / Answer

Capital Gain Yield= P1-P0/P0

where

P0 = Original purchase price of the stock

P1 = Current market price of the stock

=26-22/22

=4/22

=18.18%

NOTE:- Dividend doesnt form part of this calculation.

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