One year ago, you purchased a stock at a price of $40 a share. Today, you sold the stock and realized a total return of 30%. Your capital gain was $8 a share. What was your dividend yield on
This stock?

Question

Quizplus · Accepted Answer

Dividend yield is the percentage of the stock's annual dividend payment to the stock's current market price. Since the question does not mention any dividend payments, we need to use the formula: 
Total Return = Dividend Yield + Capital Gain Yield
We are given that the total return is 30% and the capital gain yield is $8. Therefore, 
30% = Dividend Yield + ($8/$40)
30% = Dividend Yield + 20%
Dividend Yield = 10%

One Year Ago, You Purchased a Stock at a Price