Question

Suppose a stock had an initial price of $47 per share, paid a dividend of $0.63 per share during the year, and had an ending share price of $ 38. What was the capital gains yield?

Answer 1

Answer:

Capital Gains Yield = - 0.19149 or - 19.149%

Explanation:

A capital gain is the increase in the value of an investment. A capital gain on a stock is the price appreciation of the stock as compared to the price for which the stock was purchased or acquired. The capital gains yield can also be negative if the price of the stock depreciation as compared to the acquisition price.

The formula to calculate the capital gains yield is as follows,

Capital Gains Yield = (P1 - P0) / P0

Where,

• P1 is the new price
• P0 is the initial or acquisition price

Capital Gains Yield = (38 - 47) / 47

Capital Gains Yield = - 0.19149 or - 19.149%