An investor buys a stock for $10,000 and earns dividends of $250 during the course of the year.At the end of the year, the stock is worth $9,300.The capital-gains yield for the year is

Question

Quizplus · Accepted Answer

The capital-gains yield is calculated based on the change in the price of the stock, not including dividends. The stock was bought for $10,000 and sold for $9,300, which is a decrease of $700. The capital-gains yield is therefore ($9,300 - $10,000) / $10,000 = -0.07 or -7.0 percent.

An Investor Buys a Stock for $10,000 and Earns Dividends