Suppose you bought a $100 share a month ago. It paid a dividend of $1 today and then you sold it for $100. What was your dividend yield and capital gains yield on the investment?

Question

Quizplus · Accepted Answer

Dividend Yield = (Dividend Paid / Purchase Price) x 100%
= (1 / 100) x 100% = 1%
Capital Gains Yield = [(Selling Price - Purchase Price - Dividend Paid) / Purchase Price] x 100%
= [(100 - 100 - 1) / 100] x 100% = 0% 
Therefore, the dividend yield is 1% and the capital gains yield is 0%. Option A is the closest choice.

Suppose You Bought a $100 Share a Month Ago