Today, you sold 100 shares of Natural, Inc. stock. Your total return on these shares is 10.5%. You purchased the shares one year ago at a price of $25.75 a share. You have received a total of $110 in dividends over the course of the year. What is your capital gains yield on this investment?

Question

Quizplus · Accepted Answer

The capital gains yield can be calculated by finding the difference between the selling price and the purchase price, then dividing by the purchase price. The total return is 10.5%, which includes both the capital gains yield and the dividend yield. The dividend yield is calculated as $110 in dividends divided by the initial investment (100 shares * $25.75/share = $2575), which is 4.27%. Therefore, the capital gains yield is the total return (10.5%) minus the dividend yield (4.27%), resulting in a capital gains yield of 6.23%.

Today, You Sold 100 Shares of Natural, Inc