Calculate the expected capital gain on a share that costs $1 and pays a 7c dividend if the share is sold in two years' time.Assume that the required rate of return for such a share is 7% p.a.
A)Loss of 12.7c.
B)Gain of 14c.
C)None of the given options.
D)Gain of 14.49c.

Question

Quizplus · Accepted Answer

The expected capital gain can be calculated using the formula for the future value of an investment, taking into account the dividend payments and the required rate of return. However, without specific details on the expected selling price of the share in two years, we cannot accurately calculate the capital gain from the given options. The provided information is insufficient to determine the exact capital gain, making none of the given options correct.

Calculate the Expected Capital Gain on a Share That Costs