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15 February, 09:07

Suppose you invested $100 in the Ishares High Yield Fund (HYG) a month ago. It paid a

dividend of $2 today and then you sold it for $95. What was your dividend yield and capital

gains yield on the investment?

A) 2%, - 5%

B) 2%, 5%

C) - 2%, 5%

D) 5%, 2%

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Answers (1)
  1. 15 February, 09:18
    0
    A) 2%, - 5%

    Explanation:

    The computations are shown below:

    Dividend yield = (Annual yield) : (market price) * 100

    where,

    Market price = $95 per share

    Annual dividend = $2 per share

    So, the dividend yield = ($2 per share : $95 per share) * 100

    = 2%

    Capital gain yield = (Market price - purchase price) : (purchase price) * 100

    = ($95 - $100) : ($100) * 100

    = - 5%

    We assume the purchase price is 100
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