A stock has paid dividends of $1.80,$1.85,$2.00,$2.20,and $2.25 over the past five years,respectively.What is the average capital gains yield?

Question

Quizplus · Accepted Answer

The average capital gains yield is calculated by dividing the total capital gains by the average stock price over the period. The total capital gains is the difference between the current stock price and the purchase price. The average stock price is the average of the stock prices at the beginning and end of the period. In this case, the total capital gains is $2.25 - $1.80 = $0.45. The average stock price is ($1.80 + $2.25) / 2 = $2.025. Therefore, the average capital gains yield is $0.45 / $2.025 = 5.79%.

A Stock Has Paid Dividends of $1