One year ago, Steven purchased 4,200 shares of KNF stock for $177,072. Today, he sold those shares for $48.10 a share. What is the capital gains yield on this investment if the dividend yield is 3.3 percent?

Question

Quizplus · Accepted Answer

First, we need to calculate the total dividend Steven received.

Dividend = (Number of shares) x (Dividend yield) x (Price per share)

Dividend = 4,200 x 0.033 x $48.10 = $6,383.40

Next, we need to calculate the total proceeds from the sale of the shares.

Proceeds = (Number of shares) x (Price per share)

Proceeds = 4,200 x $48.10 = $202,020

The capital gains yield is calculated as follows:

Capital gains yield = (Proceeds - Cost) / Cost

where cost is what Steven paid for the shares, including any brokerage fees.

Cost = $177,072

Capital gains yield = ($202,020 - $177,072) / $177,072 = 0.1409 or 14.09%

Therefore, the correct answer is D) 14.09 percent.

One Year Ago, Steven Purchased 4,200 Shares of KNF Stock