Stacy purchased a stock last year and sold it today for $4 a share more than her purchase price. She received a total of $1.15 per share in dividends. Which one of the following statements is correct in relation to this investment?
A) The dividend yield is expressed as a percentage of the par value.
B) The capital gain would have been less had Stacy not received the dividends.
C) The total dollar return per share is $2.85.
D) The capital gains yield is positive.
E) The dividend yield is greater than the capital gains yield.

Question

Quizplus · Accepted Answer

Capital gains yield refers to the increase in the price of the stock from the purchase price to the selling price. Since Stacy sold the stock for $4 more per share than her purchase price, this indicates a positive capital gains yield, regardless of the dividends received.

Stacy Purchased a Stock Last Year and Sold It Today