A share is bought for $22.00 and sold for $26.00 one year later, immediately after it has paid adividend of $1.50. What is the capital gain rate for this transaction?

Question

Quizplus · Accepted Answer

The capital gain rate can be calculated using the following formula: 
Capital gain rate = (selling price + dividends - buying price) / buying price

In this case, the buying price is $22.00, the selling price is $26.00, and the dividend is $1.50.

Capital gain rate = (26.00 + 1.50 - 22.00) / 22.00 
= 5.50 / 22.00 
= 0.25

To convert the decimal to a percentage, multiply by 100: 
0.25 x 100 = 25%

Therefore, the capital gain rate for this transaction is 25%, which corresponds to choice letter B (18.18%).

A Share Is Bought for $22