One year ago, you purchased 500 shares of stock at a cost of $10,500. The stock paid an annual dividend of $1.10 per share. Today, you sold those shares for $23.90 each. What is the capital gains yield on this investment?

Question

Quizplus · Accepted Answer

The first step is to calculate the total amount of dividends received over the year, which is:
500 shares x $1.10 per share = $550
The next step is to calculate the total selling price of the shares, which is:
500 shares x $23.90 per share = $11,950
The final step is to calculate the capital gains yield, which is the percentage increase in the total value of the investment:
(($11,950 - $10,500) + $550) / $10,500 x 100% = 13.81% 
Therefore, the answer is D, 13.81%.

One Year Ago, You Purchased 500 Shares of Stock at a Cost