Question

Suppose you bought 200 shares of stock at an initial price of $52 per share. The stock paid a dividend of $0.44 per share during the following year, and the share price at the end of the year was $36. What is the percentage capital gains yield

Answer 1

Answer:

We can find the capital gains yield from the following formula:

Capital Gains Yield =  Increase or decrease in the share price divided by Original cost of the shares when purchased

By putting values

Capital Gains Yield = ($52 - $36)/$52 = -30.7%

Explanation:

We can see that there is a decrease in the share price and this is also evident form the capital gains yield formula.