Question

A stock is bought for $ 21.00 and sold for $ 26.00 one year​ later, immediately after it has paid a dividend of​ $1.50. What is the capital gain rate for this​ transaction? A. 11.91 ​% B. 23.81 ​% C. 19.05 ​% D. 4.76 ​%

Answer 1

Capital gain rate = (Ending stock price – Initial stock price)/ Initial stock price

                              = ($ 26 - $ 21)/$ 21

                              = $ 5/$ 21 = 0.2380952381 or 23.81 %              

Capital gain rate for the transaction is 23.81 %

Hence option “B. 23.81” is correct answer.