Suppose you bought a $100 share a month ago. It paid a dividend of $2 today and then you sold it for $99. What was your dividend yield and capital gains yield on the investment?
A)-2%, 1%
B)2%, 1%
C)2%, -1%
D)1%, 2%

Question

Quizplus · Accepted Answer

Dividend yield = (Dividend amount / Initial price of share) x 100
= (2 / 100) x 100
= 2%
Capital gains yield = [(Selling price - Initial price) / Initial price] x 100
= [(99 - 100) / 100] x 100
= -1%
Therefore, the dividend yield is 2% and the capital gains yield is -1%. The best choice is C.

Suppose You Bought a $100 Share a Month Ago