McCoy paid a one-time special dividend of $3.20 on 18 October 2012. Suppose you bought McCoy stock for $47.00 on 18 July 2012, and sold it immediately after the dividend was paid for $63.32. What was your capital gain yield from holding McCoy?

Question

Quizplus · Accepted Answer

Capital gain yield can be calculated using the following formula:

Capital gain yield = (Net proceeds from sale – Purchase price – Dividend) / Purchase price

In this case, the net proceeds from sale is $63.32, the purchase price is $47.00, and the dividend is $3.20.

Capital gain yield = ($63.32 - $47.00 - $3.20) / $47.00 = 0.347 or 34.7%

Therefore, the correct answer is D, 34.7%.

McCoy Paid a One-Time Special Dividend of $3