Suppose you bought 500 shares of stock at an initial price of $41 per share. The
ID: 2770206 • Letter: S
Question
Suppose you bought 500 shares of stock at an initial price of $41 per share. The stock paid a dividend of $.36 per share during the following year, and the share price at the end of the year was $42.
What is the capital gains yield?
What is the dividend yield?
What is the total rate of return on the investment?
Suppose you bought 500 shares of stock at an initial price of $41 per share. The stock paid a dividend of $.36 per share during the following year, and the share price at the end of the year was $42.
Explanation / Answer
Capital gains yield = (42-41)/41=2.439%
Dividend yield = .36/41=0.878%
Dividend yield = .36/41=0.878%
Total rate of return = 2.439%+0.878%=3.317%Related Questions
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