You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year.

What is the capital gains yield for the investment?

Question

You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year.

What is the capital gains yield for the investment?

Quizplus · Accepted Answer

The capital gains yield is calculated as the percentage increase in the stock price, which is the difference between the selling price and the purchase price divided by the purchase price. Here, it is (($47 - $45) / $45) * 100 = 4.4%.

You Purchase 100 Shares of Stock at a Price of $45