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2 November, 20:17

Today, you sold 540 shares of stock and realized a total return of 7.3 percent. You purchased the shares one year ago at a price of $24 a share and have received a total of $86 in dividends. What is your capital gains yield on this investment?

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  1. 2 November, 20:33
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    Capital gains yield on the investment is 6.64%

    Explanation:

    We start by calculating the total return.

    Mathematically;

    Total Return = (Final Price - Initial Price + Dividends) / Initial Price

    Dividends/share = $86/540 = $0.1593

    7.3% = (Final price - 24 + 0.1593) / 24

    1.752 = (Final price - 24 + 0.1593)

    Final Price = $25.5927

    Mathematically;

    Capital Gains Yield = (Final Price - Initial Price) / Initial Price

    Capital Gains Yield = (25.5927 - 24) / 24 = 6.64%
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