Question

One year ago, you purchased 500 shares of stock at a
cost of $9500. The stock paid an annual dividend of $2.20 per
share. Today, you sold those shares for $25.5 each. What is the
capital gains yield on this investment? What was your dividend
yield on this investment? And what is total dollar return? What is
Percentage return?

Answer #1

Cost of stock at time of purchase (P0) ($9,500 / 500) = $19

Cost of stock today (P1) = $25.50

Capital gain yield = [(P1 - P0) *100] / P0 = [($25.50 - $19) *100] / $19

Capital gain yield = 0.3421 or 34.21%

**Capital gain yield = 34.21%**

Dividend Yield = Dividend / P0 = $2.20 / $19 = 0.1158 or

**Dividend Yield = 11.58%**

Total percentage return = Capital gain yield + Dividend Yield = 34.21% + 11.58%

**Total percentage return = 45.79%**

Total dollar return = [$2.20 + ($25.40 - $19)] * 500 shares = $4,350

**Total dollar return = $4,350**

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