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kondaur [170]
3 years ago
9

Suppose you invested in the Ishares High Yield Fund​ (HYG) a month ago. It paid a dividend of today and then you sold it for . W

hat was your dividend yield and capital gains yield on the​ investment?
Business
1 answer:
vovangra [49]3 years ago
6 0

Complete Question:

Suppose you invested $100 in the Ishares High Yield Fund HYG your dividend yield and capital gains yield on the investment?

It paid a dividend of $2 today and then you sold it for $95. What was Dividend Yield and Capital Gains Yield on the investment?

Answer:

Dividend Yield is 2%

Capital Gains Yield is -5%

Explanation:

<u>Dividend Yield:</u>

We can calculate the Dividend Yield using the following formula:

Dividend Yield = D0 / Initial Stock Price

Here

D1 was Dividend paid just now and is $2 per share

Initial Stock Price before the dividend payment was $100 per share

By putting values, we have:

Dividend Yield = $2 per share / $100 per share = 2%

<u></u>

<u>Capital Gains Yield:</u>

We can find capital gains yield by using following formula:

Capital Gains Yield = (P1 - P0) / P0

Here

P1 is $95

P0 is $100

By putting values we have:

Capital Gains Yield = ($95 - $100) / $100 = -5%

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